Insurtech funding in Latin America (LatAm) fell to a historic low of $26 million during the first half of 2024, marking a 78% decline from the same period in 2023.
Looking at the period between July 2023 – June 2024, inclusively, the total rose to $43 million, marking the lowest figure on record.
Looking past this downturn in venture capital investment, the insurtech ecosystem across the region expanded by 6%, now boasting a total of 498 startups. Considering a 10% mortality rate, organic growth managed to reach over 16% in the past 12 months, with 77 new insurtech ventures.
These insights stem from a recent report, compiled by Digital Insurance LATAM and sponsored by MAPFRE, which analyses the state of the insurtech industry across the LatAm region.
It’s important to note, that despite the lack of investment, the ecosystem across the region is continuing to grow.
If we break down the total number of startups in the region, Brazil is leading with 203, followed behind by Chile with 72, and Colombia with 67.
According to insights, the Pacific region is showing the highest percentage growth, notably Central America (69%), Ecuador (35%), Colombia (24%), and Peru (23%).
During H124, international expansion increased by 11%, with a total internationalisation index of 13.4%.
A key factor to highlight, is that multilatina insurtech startups, operating in multiple countries, represent 13% of the market. Both Peru (42%) and Chile (30%) are reportedly driving this expansion due to their business scalability needs, while Brazil exports very few insurtechs (<1%) due to its unique market dynamics.
Furthermore, the report also showcases that mortality among insurtech startups is declining across the LatAm region, with the annual mortality rate within the ecosystem standing at 10%, with 49 insurtechs closing over the past 12 months.
However, of these closures, 92% were locally-based startups, which demonstrates the critical role of multilatinas in ensuring business survival.
Brazil bears the highest mortality burden at 12%, while Argentina and Colombia have shown notable improvements with rates of 4% and 7%, respectively, over the last year.
Moving forward, around 53% of insurtechs in the region are said to be focusing on distribution, marking a 6% decline from 2020.
Despite the decline, distribution is still continuing to dominate, though the ecosystem is said to be increasingly exploring other business models.
Most distributors specialise in personal lines, such as auto and home insurance, with Broker and Managing General Agent (MGA) models comprising 42%.
As well as this, enablers have seen a 6-percentage-point increase over the past four years, now making up 47% of the total within the Latin American insurtech ecosystem.
Hugues Bertin, CEO and Founder of Digital Insurance LATAM, commented: “The Insurtech ecosystem in Latin America shows remarkable resilience. Despite limited funding, the mortality rate has dropped from 13% to 10%, with Argentina notably rebounding (+6%). I’ve never seen such enthusiasm in these countries to collaborate with Insurtech startups. Initiatives like the Pacific Insurtech Alliance and other associations will continue to co-create the future of insurance, bridging both these innovative players and all traditional stakeholders, including major insurers in Latin America.”
Carlos Cendra, Scouting & Investment Lead at MAPFRE Open Innovation, said: “It speaks volumes about Latin American entrepreneurs that, despite limited investment, the ecosystem remains firmly committed to creating and fostering new startups to drive sector growth and narrow the insurance gap. Latin America is remarkably resilient and a highly attractive region for both local and international investors”.
