InsurTech Investment Set Quarterly Record during 2021's First Quarter

Global investment in InsurTech reached a record quarterly high of $2.55 billion during the first quarter of 2021, according to the new "Quarterly InsurTech Briefing" from Willis Towers Watson (WTW).

The record InsurTech fundraising marks a continued rebound for the sector from a brief COVID-19 pandemic-related slowdown a year ago, WTW said. Total funding during this year's first quarter grew 180 percent from the amount raised in the first quarter of 2020, the broker said.

Growth during this year's first quarter was also a 22 percent increase from the fourth quarter of 2020, while the number of discrete deals grew 42 percent from the previous quarter. First quarter InsurTech investment was driven primarily by property-casualty focused companies, Willis Towers Watson said, which represented 69 percent of the deal share.

Eight companies were responsible for more than $1.13 billion in funding during first quarter, 44 percent of the total raised, WTW reported, representing a new quarterly high for the number of "mega-round" fundraisings of $100 million or more. Next Insurance, Coalition, Zego, Sidecar Health, Pie Insurance, Clarify Health, Corvus Insurance Agency, and TypTap all raised sums equal to or greater than the mega-round threshold.

The quarter also saw the most geographically diverse set of early-stage InsurTech start-ups in a single quarter, with 24 countries represented.

"The record level of activity this quarter reflects our industry's ever more widespread willingness to engage and adopt technology, which continues to grow at an unprecedented rate," said Dr. Andrew Johnston, global head of InsurTech at Willis Re. "Technological innovation gains ground only when a community emerges to support it, and COVID-19, more than any other factor, has rapidly accelerated the change that was already well under way. COVID-19 has helped strengthen the narrative, and demonstrably illustrate the results technology can deliver, which are now being achieved at scale."

Dr. Johnston cautioned, however, that InsurTech solutions must make intellectual and commercial sense to their target users, whether they’re insurers, brokers, or insurance buyers.

"For them, the technology itself is the least interesting part of the initiatives," he said. "Unfortunately, a failure to understand these realities, in addition to the general difficulty of entering our industry as a nascent business, means that many InsurTechs will most likely never achieve the grandeur of their aspirations."