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InsurTech deal count up but investment volume down at Q2: Willis Towers Watson

20th September 2018 - Author: Matt Sheehan

The second quarter of 2018 marked a record high for InsurTech deals as a total of 71 funding transactions took place, although the collective investment value of $579 million was down 20% against the prior quarter, according to re/insurance broker Willis Towers Watson.

Fintech image via George Washington UniversityThe broker’s Quarterly InsurTech Briefing, produced in collaboration with CB Insights, also found that, compared with Q2 of 2017, overall deal count increased by 9% while funding volume declined by 42%.

However, looking at Property & Casualty (P&C) alone, Willis Towers Watson observed that funding volume increased by 72% over Q1 2018 and increased by 49% from Q2 2017.

Q2 2018 also set a new record for the volume of incumbent participation in InsurTech investment and the first time that 5-year Life & Health InsurTech investment exceeded $5 billion.

Willis Towers Watson claimed that the complexity of change occurring within the value chain in the Life & Health space is much greater than in other insurance subsectors, noting that the potential positive impact on quality of life for the customer is substantially more profound.

InsurTech companies are accelerating this transformation by developing tools to harness data and analytics, such as wearable sensors, which may lead to a greater convergence between Health insurers and Life insurers.

Technology start-ups have also helped insurers to create more customer-centric Life & Health products that reduce the complexity of the purchasing process while deliver tailored and flexible solutions.

Greg Solomon, Head of Life & Health Reinsurance at Willis Re International, said: “The application of InsurTech in the Life & Health sector ranges from the explicit use of new technologies to distribute and underwrite insurance policies, to more indirect usage such as wellness, where technology is deployed simply to make policyholders healthier and happier.”

“But everything overlaps,” he added. “Innovations are either driven by (re)insurers or used by them, or engaged by prospects and policyholders, which affects (re)insurers’ experiences. The change will be profound, but many incumbent carriers have some way to travel yet.”

By developing customised insurance offerings that better align with sales incentives and help to resolve compliance issues, InsurTechs can also create a more effective distribution channel and better address the Health insurance protection gap, Willis Towers Watson said.

Additionally, the report noted that the trend of InsurTechs utilising artificial intelligence, machine learning, and chat-bots has helped to place a greater emphasis on risk mitigation and prevention, and has provided better tools for Life & Health underwriters to predict life expectancy and the probability of illness.

“While P&C insurers certainly have a chance to develop real time dialogues with their customers, the opportunity hardly compares with that for Life & Health insurers” said Rafal Walkiewicz, Chief Executive Officer of Willis Towers Watson Securities.”

Walkiewicz continued: “We believe that the eventual winners in the Life & Health industry will be the ones who shift their attention from primarily offering death benefits, investment support and coverage for protection gaps to offering customers a true partnership to live longer and healthier lives.”

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