Insurance is still a strongly underfunded market, especially in areas such as life insurance. Operational efficiency is now a must for insurtechs and insurers. Insurtech startups are enabling operational efficiency through the whole value chain
Insurtech has also largely focused on the P&C market which attracted over 60% of the funding in the latest years. Life insurance has been particularly underinvested and still awaiting for much needed change
The funding environment for global Insurtech industry has toughened, but early stage funding and some leading private players show that opportunities still exist for quality startups, said a report-“The State of Global Insurtech” prepared by Dealroom.co, Mundi Ventures, MAPFRE, NN Group, and Generali.
According to the report, insurtech funding is now back to 2018-2019 levels and amounted to $2.4 billion(in H1 2023) , a 45% decrease compared to the same period in 2022.
Venture capital investment pulled back over 50% in H1 2023 YTD compared to H1 2022 and nearly 4x from peak. The pullback has been mostly at late stage which is down over 60% from peak, while early stage has stabilized at a nearly 30% drop.
The so-called “death of Insurtech 1.0” has cast the whole insurtech space away from the spotlight, but the insurance industry is still a massive market undergoing major transformations, said the report.
Insurtech represents a massive $7 trillion opportunity, larger than the Mobility market which received though 5x more funding in 2022-2023. Also financial services represents a less than double market size, but received nearly 10x the funding.
Insurance is still a strongly underfunded market, especially in areas such as life insurance. Operational efficiency is now a must for insurtechs and insurers. Insurtech startups are enabling operational efficiency through the whole value chain, suggested the report.
Insurtech has also largely focused on the P&C market which attracted over 60% of the funding in the latest years. Life insurance has been particularly underinvested and still awaiting for much needed change.
Insurance was never a growth at all cost market, but the recent financial tightening has stressed this again. Distribution is still attracting the most funding, but new approaches from hybrid distribution to embedded insurance are still opening new avenues there.
ArtIficial Intelligence (AI) was already heavily used by insurance, with variable impact across the value chain, such as in claims automation. Now GenAI opens new possibilities, but it is still to be fully understood which processes will be more
impacted, added the report.
While public insurtech valuations have plummeted, several leading private insurtechs have been able to confirm or even increase their valuation in recent months.
Insurtech startups are now worth $281B, with private companies representing 85% of the overall sector. The value of private companies takes longer to adjust.
While private companies grew significantly from 2021 to 2022 (+19%), since then the growth has slowed down in the first quarter of 2023 (+1% YoY). In contrast, the value of public insurtech valuations dropped significantly from 2021 to 2022 (-59%).