Insurtech fundraising rebounds following COVID-induced slowdown

Some £1.21bn was raised by insurtech firms in the Q2, as the sector brushed itself off following the COVID-induced slowdown in the first quarter.

The total, up over 70% on Q1, was driven in part by later-stage investments, including four mega-rounds in excess of £77.6m, according to data from Willis Towers Watson.
Deal count was down at 74, as investors continued to turn away from seed and angel deals in favour of support for more mature ventures. P/C sector investments predominated, according to WTW's data, accounting for 68% of funding. Notable was the initial public offering of Lemonade and the acquisition of two incumbent insurance companies by insurtechs, Hippo and Buckle.

Dr Andrew Johnston, global head of insurtech at Willis Re, said: “While insurtech investment clearly rebounded in Q2, and the trend towards greater commitments to later-stage fundraising continues, we should be cautious and not read too much into the general state of the global InsurTech market based on this quarter alone. In the short term, investment confidence will test the status quo, especially for highly leveraged insurtechs. Similarly, certain risks and their associated vectors have changed fundamentally and so the impact of that is yet to be truly felt. It is quite possible that we will observe a general slowing down of insurtech activity as a result.

"In the medium term, changing risk classes may be better understood alongside rising consumer optimism, but the true economic impact of COVID-19 probably won’t unfold until 2021 and 2022. This will undoubtedly impact many re/insurers’ appetite to invest in or deploy technology. Survival may be a challenge for some insurtechs, especially if their use-case has been lost forever due to underlying societal change following the lockdown. Equally, such changes will create opportunities for others. If the funding gap between Seed and later stages continues to widen then many insurtechs will struggle to acquire the funds required for maturing growth."

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