The insurtech sector received $6.37 billion in investments throughout 2019, with nearly $2 billion of that figure coming from the fourth quarter alone, a Willis Towers Watson report has found.
During the year, eight rounds of investment took place which led to the creation of five insurtech start-ups valued at over $1 billion, while funding rounds exceeding $40 million jumped by 90%.
In Q4 2019, WTW says insurtechs raised $244 million in early stage funding, while P&C start-ups continued to take a greater share of total investment than their life and health counterparts, continuing a trend seen since Q3 2016.
Early stage funding to P&C companies grew to 69%, up slightly compared with the previous quarter, with distribution- and MGA-focused insurtechs accounting for 57% of all deals by number.
“2019 was the year when individual InsurTechs began to come to the fore to lead in specific parts of the market, whether in certain lines of business or in the use of particular technologies. For example, UK-based Concirrus is now clearly the forerunner in behavioural-based analytics for the specialty markets,” said Dr Andrew Johnston, global head of insurtech at Willis Re.
“But while InsurTech news is awash with the huge valuations and postulations of the art of the possible, there is also a very real story that is not so positive – individual InsurTech cessations. The number is very difficult to calculate, but our data indicates that during the past three years, approximately 184 funded InsurTechs might have closed their doors.”
Tom Helm, head of Claims Consulting at Willis Towers Watson’s Insurance Consulting and Technology business, added, “Although the very simplest common claims, such as automobile windscreen, may already be handled entirely by automated systems at some insurers; end-to-end automation can never work in all scenarios, even in consumer lines.
“Some aspects of the claims process require complex human judgement or investigation, and other cases, such as the need to empathise with a customer who needs support, demand the human touch. This means that claims handlers will remain in the driving seat.
“It is essential that automated mechanisms are able to identify when a situation needs human intervention, making effective management of the interaction between handler and machine a critical consideration.