Insurtech Investments Hit New High in Q1: Willis Towers Watson

Insurtech investment deals reached a new high in the 2018 first quarter, with older insurers and reinsurers increasingly committing financing right along with traditional venture capitalists, Willis Towers Watson found.

There were 66 insurtech investment deals during the quarter at an investment volume of $724 million. That’s up 155 percent from the 2017 first quarter and 16 percent from Q4’s collective deal value of $624 million, Willis Towers Watson noted in its new quarterly insurtech briefing produced in collaboration with CB Insights.

The briefing cites seven insurtech investment rounds worth more than $30 million that were completed during the quarter.

Also noteworthy: insurers and reinsurers preferred minority investments in startups developing technology that could improve things in their own operations such as distribution costs and claims handling, a focus on better processes overall. But traditional venture capital investors tended to focus on insurtechs that addressed customer “pressure points” in terms of selling products, areas such as ease of access, price and underserved markets via innovation, according to the briefing.

Willis Towers Watson said traditional venture capitalists focus more on taking majority investment stakes, and look at integrating the technology across the industry value chain. Their main driver: investment return. Venture capitalists tend to pursue more radical ideas, the briefing said, because they “often lack meaningful access to the insurance market.”

“For insurtech startups, the funding scene is more complex, and finding the right investment partner has become more difficult,” Rafal Walkiewicz, CEO, Willis Towers Watson Securities, said in prepared remarks. “Hybrid [funding] models will continue to evolve, and may be the ultimate answer for insurtech entrepreneurs looking to balance industry expertise and the traditional value-creation mentality.”