Insurtech Investments and Valuations Soar Even As Some Startups Fail Fast

Insurtech investments reached an historic high in 2019 but last year also capped a three-year period where a good number of insurtech startups called it quits.

According to a new briefing on the sector from Willis Towers Watson, dozens of tech startups have quietly closed up shop.

“While insurtech news is awash with the huge valuations and postulations of the art of the possible, there is also a very real story that is not so positive – individual insurtech cessations,” noted Andrew Johnston, global head of Insurtech at Willis Re.

He said the number is “very difficult to calculate” but his firm’s data indicates that during the past three years, approximately 184 funded insurtechs appear to have closed their doors.

The Willis Towers Watson report suggests that the number of insurtechs that have closed up shop might actually be much larger than its 184-company estimate. The reason: tracking a company is possible only after it raises money, and many don’t raise investment funds.

Total new global funding commitments to the insurtech sector hit $6.37 billion for the year, with approximately $2 billion coming in for 75 projects during the 2019 fourth quarter alone, the Willis Towers Watson Quarterly InsurTech Briefing noted.

Johnston said that 2019 was the year that many insurtechs began to take leadership positions in certain parts of the market, either in certain lines of business or in the use of certain technologies.

“For example, UK-based Concirrus is now clearly the forerunner in behavioral-based analytics for the specialty markets,” Johnston claimed.

Willis Towers Watson cites a number of related insurtech investment milestones for the year, such as eight “unicorn making” rounds of investment that led to five new unicorns – privately held startups valued at over $1 billion. That’s out of a total of only 10 insurtechs around the world that have reached this threshold.

Other insurtech investment trends Willis Towers Watson noted from 2019: There was a 90 percent jump in investment rounds that exceeded $40 million.

For the fourth quarter, insurtechs raised $244 million in early stage funding. P/C star-ups continued to win more insurtech investment than their life and health counterparts, a trend in play since the 2016 third quarter.

Early stage funding to P/C companies grew to 69 of the total, up slightly compared with the previous quarter. Of the insurtech and investment totals, distribution and MGA-focused insurtechs accounted for 57 percent.