Insurtech investments up 155% on 2017

New models of of financial backing helped insurtech investments reach a new high for Q1 of this year.

There were 66 insurtech deals for Q1 2018 amounting to $724m (£541m) of investment, according to the findings in the latest quarterly InsurTech Briefing from Willis Towers Watson.

This is up 16% on Q4 for 2017 and up 155% from Q1 2017.

Among these were seven deals worth over $30m (£22.5m).

Paddy Jago, Global Chairman of Willis Re, said: “The incumbent market has actually been relatively receptive to taking a serious look at the digital innovation that is going on around us, and those driving it. Most of us know that to remain relevant, we need to embrace change. I have always believed that we cannot view change and not change ourselves.”

The report found insurtech had been helped by the emergence of a third stream of investment through investment funds – described as a hybrid between traditional sources of investment through insurers and venture capitalists.

Findings in the report included that insurance sector incumbents prefer minority investments in start-ups developing technology which will ease their own commercial pressure points, including distribution costs, claims handling, and underwriting excellence.

In contrast, traditional VC investors tended to focus on insurtechs which address customer pressure points such as price, ease of access, and underserved markets through innovation. They tended to be product not process-focussed, and looked to developments in other sectors for ideas.

The ‘hybrid’ models of investment combined were described as creating “a more aligned model that targets both financial and strategic returns for its investors.”

Rafal Walkiewicz, chief executive of Willis Towers Watson Securities, said: “For insurTech start-ups, the funding scene is more complex, and finding the right investment partner has become more difficult. Hybrid models will continue to evolve, and may be the ultimate answer for insurTech entrepreneurs looking to balance industry expertise and the traditional VC value-creation mentality.”