Capital invested in insurance technology start-ups surpassed the $10bn mark for the first time in any one year on record, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
The record-breaking $10.5bn was raised during the first three quarters of the year.
Still with three months left to go, 2021 is now only $12m short of the entirety of what was invested into InsurTechs globally in 2018 and 2019 combined.
The total deal count was 421 which is also an annual record.
The latest quarter saw 113 deals yield more than $3.1bn in investment, a 23% increase over Q3, 2020. Deal numbers were up only 9% year-on-year, but the number of mega-rounds of $100+ million reached 11 and accounted for more than half of total funding, down from nearly 70% in Q2, 2021, a quarter that broke nearly every record.
Two of the three largest deals were with cyber-related InsurTechs: Coalition ($205m) and At-Bay ($185m).
The share of US-domiciled investment targets rebounded to nearly 46%, an increase of roughly seven points from the previous quarter, but countries including Indonesia, Sweden, South Africa, Singapore, and the UAE saw quarter-on-quarter increases in deal activity.
Early-stage startups raised a record-breaking $630m, as their average deal size grew to nearly $12m. The share of seed and angel rounds fell dramatically, however, to just 19%, its lowest point since Q2, 2020. Conversely, Series A deal count nearly doubled to 31% of deals.
Andrew Johnston, global head of InsurTech at Willis Re, said: "The continuing escalation of InsurTech funding does not mean that venture and growth capital is available to most or even many InsurTechs.
The growth of global InsurTech investment over the past decade has been significant, but the stark pattern is a concentration of the much for the few. For example, in the second quarter, more than two-thirds of the total capital raised went into 15 deals. Roughly 0.5% of the world's InsurTechs shared $3.3 billion, while $1.5 billion was distributed between another 147. Funding was zero for the remaining 95%."
The latest Briefing, which explores InsurTechs focused on the future of risk, opens with a deep dive into the ways InsurTech are attempting to deliver innovations that ultimately lead to better insurance outcomes. This Briefing includes case studies of the InsurTechs:
• OTONOMI, a blockchain-enabled parametric MGA in the cargo space;
• Corvus, an MGA with an AI-driven approach to commercial risk;
• Arbol, a platform for parametric weather risk products;
• Stable, which provides price risk management tools for the food and farming sectors;
• Understory, a platform for hyperlocal climate-risk analysis;
• Concirrus, which uses IoT data and AI to design and price digital insurance products;
• Kettle, a reinsurance MGA that uses AI to assess perils, starting with California wildfires; and
• Previsico, a flood modeler focused on surface water flooding.