Over 50% of InsurTech investment globally was raised by companies in North America
- North American InsurTech companies have dominated investment raised in the sector since 2015 with 51.4% of capital being reeled in by companies in the region. As North America has a private healthcare system, the InsurTech landscape in the region is infused with companies looking to provide technology-first solutions to address the bureaucracy issues associated with the Medicaid and Medicare programs, offering an attractive investment opportunity for investors.
- Europe has also attracted a healthy share of investment with 24.8% of InsurTech capital being raised by companies in the region. In recent years, the share of InsurTech deals has been shifting from North America to Europe as companies here are recognising the integral role of investment in digital transformation for the insurance space as part of a larger improvement strategy.
- InsurTech in Asia has also been flourishing with 22.1% of total funding globally being raised by InsurTechs in the region. In Asia, traditional insurance tends to be biased towards high-net-worth individuals, due to the disproportionate effect of agents being driven by commission, hence presenting a great opportunity for investors to capitalise on the mass market left out by traditional insurance companies which can be targeted by InsurTechs. Furthermore, according to research by Swiss Re, more than 90% of the Asian population are without any type of insurance, hence investment in Asian InsurTech is a very attractive opportunity to investors.
Over $7bn was raised by InsurTech companies globally in 2019
- InsurTech companies globally have raised over $18.9bn between 2015 and 2019, across 1,115 transactions. Investment increased at a CAGR of 32.6% during the period with 55.3% of the capital raised being invested in deals valued at or above $100m.
- InsurTech companies raised more than $7.1bn across 261 transactions in 2019, a 63.7% increase on the capital raised during 2018, exemplifying the growth of the sector, which according to Accenture has been driven by a global consumer appetite for incumbent insurance companies to engage in digital transformation.
- Average deal size during the period increased nearly four-fold from just $6.9m in 2015 to $27.4m in 2019 as the sector has matured to include more established firms looking for later-stage investment rather than smaller, early-stage deals.
Nearly one in ten InsurTech deals globally in 2019 were valued at or above $100m
- The global InsurTech landscape has witnessed a shift since 2015 from investors predominantly backing smaller deals towards backing more later-stage deals.
- Back in 2015, deals valued below $10m made up 72.8% of all InsurTech deals raised globally. This has since dropped and in 2019 only 55% of InsurTech deals were in this size bracket.
- As the InsurTech landscape matures globally, deals valued at or above $100m have increased by 6.6 percentage points (pp) over the five-year period. Just 2.4% of deals were in this size bracket back in 2015, and 9% of deals are of this value in 2019. This comes as investors are forced to concentrate on later-stage transactions in order to keep up with the large capital requirements which are necessary to support significant digital transformation.
More than half of the top 10 InsurTech deals globally were raised by companies in North America or Europe
- Over $2.3bn was invested in the top 10 InsurTech transactions globally in Q4 2019, with six of these transactions involving InsurTech companies based in North America or Europe. The funding raised in the top 10 deals of Q4 2019 is equivalent to 83.2% of the total capital raised across the 65 deals of the quarter.
- Bright Health provides health insurance plans directly to customers via broker partners, and through both public and private health insurance exchanges. The Minnesota-based company raised $635m in a Series D round led by NEA bringing the total amount raised by the company to more than $1bn. The health insurance startup plans to use the capital to expand its health plan products to several new markets in 2020.
- The largest deal raised outside of North America or Europe came from Phoenix Insurance Company which offers life insurance products and health line insurance products for medical treatment, surgery, pharmaceuticals and transplants. The company raised $446m in a secondary market round from Gallatin Point Capital and Centerbridge Partners LP.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2020 FinTech Global
