Article Synopsis :
This comprehensive quarterly report from Willis Towers Watson and CB Insights summarizes the InsurTech investment environment for the first quarter of 2018. This issue also provides insightful reviews and profiles on InsurTech capital providers—including traditional VCs, incumbent insurance funds, and hybrid solutions.
InsurTech funding was a robust $724 million in Q1 2018
Key data points include:
Strong deal volume to kickoff 2018
- InsurTech funding volume: $724 million in Q1 2018
- 16% increase from $624 million in Q4 2017; 155% increase year-over-year from $284 million in Q1 2017
- 66 total transactions in Q1 2018 represents highest transaction volume completed in any quarter to date
- U.S. accounted for 60% of transactions since 2013, but only 53% in Q1 2018
- Seed/Series A transactions comprised 66% of total transactions in Q1 2018 compared to 64% of all transactions since 2013 and 52% of transactions completed in Q4 2017
- P&C funding volume was 47% lower from Q4 2018, but 95% higher than year-over-year Q1 2017
- L&H funding volume was 213% higher from Q4 2018 and 204% higher year-over-year Q1 2017
Seven $30+ million investment rounds contributed to the fourth highest funding volume in any quarter to date
- Oscar Health closed a $165 million Series D round in March 2018
- Collective Health closed a $110 million Series D round in February 2018
- Bind On-Demand Health Insurance completed a $60 million Series A round in February 2018
- Root Insurance completed a $51 million Series C round in March 2018
- Justworks completed a $40 million Series D round in March 2018
- Qualia Labs completed a $33 million Series B round in March 2018
- Ladder completed a $30 million Series B round in January 2018
Continued concentration on the Distribution sector
- 56% of P&C and 70% of L&H transactions in Q1 2018 involved companies focused on insurance distribution, compared to 62% and 46% respectively of all such transactions since 2013
Technology partnerships remain a priority
- 27 private technology investments by (re)insurers in Q1 2018 represents highest Q1 activity in any previous year
- Partnerships outside of the US remain in focus as 44% of Q1 2018 announcements were non-US compared to 39% of partnerships since the beginning of 2013
- Partnerships in Q1 2018 favor later stage companies as Angel/Series A partnerships comprised 44% of the announcements compared to 48% of partnerships since 2013
(Re)insurers, directly and through corporate venture arms, are expanding their focus to invest in a broad range of technologies with potential applications to their core (re)insurance businesses
- Allianz invested ~$60 million in American Well, a telemedicine provider to develop a lower cost and more accessible healthcare product using wearable sensors and virtual doctor visits
- Munich Re has signed an agreement with Bosch to develop packages of solutions for connected manufacturing
- PartnerRe entered into a four-year agreement with Farmers Edge to develop new agriculture insurance coverages on a worldwide basis using Farmers Edge’s satellite imagery and monitoring solutions
- Assurant partnered with TenantCloud, a cloud-based rental accounting software company to distribute renters through TenantCloud’s mobile application
- Sun Life announced a partnership with Collective Health in which the two companies will integrate Sun Life’s stop-loss offering into Collective’s platform
- Chubb partnered with Grab to offer commercial auto insurance in Southeast Asia for Grab’s on-demand ridesharing application
- MetLife partnered with Tencent WeSure, a digital insurance subsidiary of Tencent, to offer travel insurance through the WeSure platform
Startup deals show increased diversification
Announced Q1 2018 InsurTech deals included companies focused on broader insurance product strategies:
- CLARA Analytics ($11.5 million Series A in January 2018) focuses on AI/machine learning analytics for workers’ compensation claims management
- Corvus Insurance ($4 million seed investment in February 2018) focuses on data and sensor technologies for cargo insurance products
- Paladin Cyber ($4 million Series A in March 2018) and Coalition ($10 million Series A in February 2018) focus on cyber insurance and cyber security tools
- Qualia ($33 million Series B round in March 2018) and SafeChain ($3 million Series A in February 2018) focus on products for the title insurance industry
Of interest, the ‘Data Center’ at the back of the report details all InsurTech transactions taking place in Q1 2018 by firm, round, investor, and relevant details surrounding the investment.
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Digital Insurer's Comments
Insurers typically invest in InsurTech for innovative technologies to help ‘do insurance better’. Outside VCs, with no allegiance to insurance, seek industry disruption—tending to make their money more appealing to startup entrepreneurs who likewise want a bigger bang.The rise in VC money in InsurTech poses a challenge to insurers. Unable to invest in the right startups, insurers must turn within to develop desired technologies themselves. Subcontracting innovation out to InsurTech is a great strategy—but it can’t be your only strategy.
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About the Author
Tom Bobrowski
Head of North AmericaTom is responsible for developing the Digital Insurer in North America. Tom has over 20 years consulting experience, the last 10 focused on insurance, as a C-level strategist and problem solver in the areas of globalization of operations, technology transformation and change management. Tom is also the editor of the Digital Insurance Library section of the Digital Insurer.
