Don’t Be Fooled by Decreases in Investment Dollars. Insurtech’s Promise Is as Strong as Ever

According to a new report from KPMG, the insurtech space saw a significant decrease in value in 2018, but plenty of deals are still being made.
By: | March 4, 2019

Insurtech, the big business of insurance companies incorporating cutting-edge, innovative technologies into everything from underwriting to sales, to more efficiently serve their customers and improve their bottom line, isn’t going anywhere anytime soon. At least, that’s what KPMG’s newest “Pulse of Fintech” report suggests.

While value for the Insurtech industry took a hit in 2018, dropping from $10.3 billion of capital investment in 2017 to $5.7 billion in 2018, the number of deals made were still high, at 242 for the year, down just 16 from 2017.

So, why did the space experience a drop in value if plenty of deals are still in the works? The report explains it like this: “Primarily driven by outliers, earlier annual tallies suggest the entrance of not only late-stage growth investors but also strategic acquirers willing to pay significant premiums for innovations within insurance product and services lines; that interest is persisting, but check sizes have taken a breather, though it’s worth noting $6 billion is still easily the third-highest annual total ever.”

Where Are Investments Being Made in Insurtech?

According to the report, there were 13 Insurtech deals over $100 million made in 2018, with health care-related Insurtech seeing particularly high investment. Oscar Health raised $540 million and Devoted Health raised $300 million, for example.

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Outside of the health care realm, other innovators that raised significant funding in this arena include Root Insurance, an app-based car insurance platform, and Hippo, a home loan provider.

The report notes that Insurtech-based solutions are an expanding area of investment, but platform-based models, which allow for the offering of white-label products and working with a number of insurers, are also getting plenty of attention from Insurtech companies.

Why the U.S. May See Some of This Innovation Later

While Insurtech is growing globally, some of the technologies may take time to make their way to the U.S.

The report outlines predicted trends for 2019, one of them being big Insurtech investment in Asia. Some of that investment is likely to come from U.S.-based insurers. Why test there instead of here, you ask? Well, thanks to fairly light regulations, Asia makes for friendlier testing ground for innovation.

Further reading: If you are interested in learning more about Insurtech impacts insurance, our piece on how Insurtech is becoming an industry-wide solution to risks for everyone from construction companies to drivers is a good place to start.

This post on how artificial intelligence could revolutionize the industry is also a fascinating read.

Adjua Fisher is a freelance writer, editor and business owner living in Philadelphia. She is a former health and fitness editor at Philadelphia magazine. Adjua can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]