Insurtech investments 2020 worldwide: new record at 7 billions; the main growth sectors

2020 hits a new high for the insurtech world: global investment in the sector hit $7.1 billion, a 12% increase. Property & Casualty and Life & Health the leading sectors 

Published on 11 Mar 2021

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Despite initial difficulties, 2020 marks a new record for the insurtech world: global investments in the sector touched $7.1 billion, a 12% increase over the previous year. Closed deals are also on the rise, reaching 377 in the four quarters (+20%). 

Insurtech investments 2020, the turning point of Covid-19 

According to the latest report from advisory firm Willis Tower Watson, which released the data, from an operational perspective the Covid-19 pandemic has had an exceptional impact, leading to changes that would have been unachievable through individual or even industry-wide initiatives. 

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As it turns out, the insurance industry has demonstrated that it can function completely digitally, and has responded appropriately to the challenges that have presented themselves over the past 12 months. 

The challenges were not inconsistent. In 2020, insurers paid out $55 billion in compensation to their customers: the health emergency caused by the spread of the new coronavirus thus ranks second among the events with the highest outlays for the insurance world, after Hurricane Katrina in 2005 ($82 billion). 

Returns on investment have also suffered as a result of the pandemic, causing losses of $150 billion, and it is reckoned that in total the industry has seen a drop in profits of 25.2% compared to 2019. 

On the other hand, however, the insurance world can rely on an ally that is destined to become increasingly vital: technology, which is arguably the key tool for overcoming the current moment of uncertainty as of now. 

2020, the slow start and then the recovery 

In the insurtech sector, the year began in a decidedly disappointing manner: in the first quarter of 2020 investments amounted to $912 million, approximately half the amount raised in the previous quarter. 

The months of April, May and June, however, reversed the trend, thanks in part to transactions such as the IPO of Lemonade and the acquisitions of Hippo (with Spinnaker) and Buckle (with Getaway). 

The recovery persisted in the third quarter, when investments reached $2.4 billion, 70% of which was attributable to the mega rounds of Bright Health and Ki ($500 million each), Next Insurance ($250 million), Waterdrop ($230 million), Hippo ($150 million) and PolicyBazaar ($130 million). 

Finally, in the last quarter of the year, investments totaled $2.1 billion, spread across 103 closed deals in 23 countries. 

Insurtech investments 2020, the main sectors 

Companies specialized in property and casualty (P&C) insurance continue to attract the most investment (67% of the total), but medical and life (L&H) insurance is also very promising. 

A number of startups in the latter sector are already planning to go public in 2021, including Oscar Health and Waterdrop. In addition, the L&H sector has seen its diversification grow from a geographic standpoint, closing investments in as many as 13 countries in the fourth quarter, from South Africa to Switzerland. 

Smart home insurance offered by companies such as Hippo, which raised $350 million in November, and Luko, a Paris-based startup that raised $60 million in December, are also trending upward on the international insurtech scene. 

Forecasts for 2021 

Overall, 2020 was the year that technology finally established itself as a key tool for the insurance industry, and that saw the emergence of flexible services that are also suitable for gig economy workers or small business managers. 

Several insurtech companies are already planning to enter the stock market in 2021, taking advantage of the general enthusiasm shown by the markets for innovation, although Willis Tower Watson warns about the potential risks the process could bring. 

Moreover, following the growth trend that has been reconfirmed in recent years, in 2021 the number of closed deals in the insurtech world could rise further, even exceeding 400 agreements. 

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