Insurance Technology Innovation Primed For Growth

The insurance technology (insurtech) sector has seen much technological and investment development over the past few years. Traditional insurance business lines such as health, auto, and commercial are being revolutionized by new digital-centric startups. New technologies such as AI and IoT are re-architecting insurance data, the underpinning of the insurance industry. New business models, such as P2P and on-demand insurance, are disrupting the entire ecosystem on all fronts.

This blog post aims to examine how the rest of 2019 can shape up for the insurance technology industry. After conducting a thorough analysis of the sector, we have arrived at three predictions for 2019:

  • 2019 will see the highest insurtech funding on record
  • Health insurance technology will continue to dominate the industry
  • Insurtech startups will scale up in 2019

Prediction 1: 2019 Will See The Highest Insurtech Funding On Record

The graph below shows the total VC funding into insurtech startups by year.

Insurance Technology Funding Over Time
Insurance Technology Funding Over Time

As you can see, insurtech funding is on a general upward trend with a 5-year CAGR of 19%.

What’s most noteworthy on the chart is Q1 2019 funding coming in at $1.7B, a whopping 2.5 times higher than Q1 2018 and the best yearly start to date. A straight line projection would put the full 2019 funding at $6.7B, which would represent a 70% year-over-year growth and the highest annual funding on record. The largest insurtech funding events in Q1 2019 include a $500M round into Clover Health, a $129M round into FRIDAY, and a $125M round into the Wefox Group.

The dramatic funding growth and our 2019 projection demonstrate investor confidence in technology startups fundamentally advancing the insurance industry.

Prediction 2: Health Insurance Technology Will Continue To Dominate The Industry

Venture Scanner classifies chaotic startup landscapes into understandable groupings. These groupings are organized by functional categories, which are intended to get at the core offering of the startups categorized therein. For insurtech, we have broken the sector down into 14 functional categories. Analyzing them reveals a clearly dominant function: health insurance technology.

Insurance Technology Funding By Category
Insurance Technology Funding By Category

Health insurance technology startups lead the insurtech sector in overall funding at $8B. This category accounts for 33% of all insurtech funding and has almost twice the funding of the second highest category–life, home, P&C insurance. In addition, health insurance technology startups raised the most funding this past quarter (Q1 2019) at $650M. Some of the largest funding rounds into health insurance in Q1 2019 include a $500M Series E into Clover Health, a $74M Series B into Shuidihuzhu, and a $45M Series B into Alan.

Health insurance technology startups focus on producing innovative business models and technology products. A notable example in the space is Oscar Health. They provide customized health insurance plans for individuals and businesses. Their website and mobile app enable you to manage all your health information and access doctors 24/7. The Oscar Health mobile app also incentivizes healthy behavior. For example, it tracks your daily steps and if you meet your daily step goal, you earn money for gift cards.

Prediction 3: Insurtech Startups Will Scale Up In 2019

Our third prediction is that insurtech funding events will shift to later-stage financings as a result of insurtech startups experiencing increased market traction. Over the past 5 years, seed-stage funding events made up roughly 50% of all funding events into insurtech. In Q1 2019, seed-stage events dropped to 20%, while mid and later-stage funding events grew to represent a much larger portion of total funding events.

By the same token, the average funding per deal in insurtech has been growing steadily. Specifically, over the last 5 years, average funding has grown from $9M to $39M per deal.

The movement towards later-stage funding events and an increase in average deal sizes lead to the natural prediction that insurtech startups will continue to gain traction in the coming years. Realizing that their returns are directly tied to the scale of their bets, VCs are not hesitating to double down on their investment sizes to gamble for greater payoffs. These follow-on bets in the form of later-stage investments will help insurtech startups scale their operations and amplify their market share.

Conclusion: 2019 Will See Unprecedented Innovation In Insurtech

In conclusion, the observations and analyses above lead us to predict that insurtech startups are primed for explosive growth, scaling, and maturation. We predict that 2019 will be the highest funded year on record, that health insurance technology startups will continue to dominate the industry, and that insurtech funding events will increase in maturity and size over time.

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Insurance Technology Average Funding Experiencing Overall Growth

For this quarter’s funding analysis, let’s examine how average funding in the insurance technology (insurtech) sector is evolving. The graphic below shows the insurtech average funding across all deals over time by quarter.

Insurance Technology Average Funding Deal Size
Insurance Technology Average Funding Deal Size

As the graphic demonstrates, insurance technology average funding deal size in Q1 2019 was at $39M, which increased by 147% from the $16M in the same quarter last year. The average funding deal size has demonstrated upward growth, with the average funding last quarter around 3 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $500M round into Clover Health, a $129M round into FRIDAY, and a $125M round into the Wefox Group.

To learn more about our complete insurance technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Insurance Technology Sector Overview – Q1 2019

This blog post examines the different components of the insurance technology (insurtech) ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.

Insurance Comparison/Marketplace Is The Largest Insurance Technology Category

Let’s start off by looking at the Sector Map. We have classified 1,541 insurtech startups into 14 categories. They have raised $28B from 1,447 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.

Insurance Technology Logo Map
Insurance Technology Logo Map

We see that Insurance Comparison/Marketplace is the largest category with 416 companies. These companies enable consumers to compare different insurance providers or buy insurance of any kind (car to home to health). Some example companies are Goji, Policygenius, CoverHound, and Coverfox.

Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.

The Pioneers Quadrant Has the Most Insurance Technology Categories

Our Innovation Quadrant divides the insurtech categories into four different quadrants.

Insurance Technology Innovation Quadrant
Insurance Technology Innovation Quadrant

We see that the Pioneers quadrant has the most number of insurtech categories at 10, accounting for 71% of all insurtech categories. The Reinsurance category has the highest average age, and the Auto Insurance category has the highest average funding. On the other hand, the P2P Insurance and Consumer Management Platforms categories are low on both average funding and age.

To learn more about our complete insurance technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Insurance Technology Report Highlights  – Q1 2019

Here is our Q1 2019 summary report on the insurance technology startup sector. The following report includes a sector overview and recent activity.

To learn more about our complete insurance technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Insurance Technology Exit Activity Declined in 2018

As we make our way through Q1 of 2019, let’s look back on 2018 and analyze how exit activity for insurance technology (insurtech) compares to previous years. The graphic below shows total annual insurtech exit events over time.

Insurance Technology Exits Over Time
Insurance Technology Exits Over Time

As the graphic demonstrates, 2018 saw a drop in insurtech exit activity compared to the previous year. The 22 exit events in 2018 represent a 44% decrease from the 39 exit events in 2017, which was the highest year on record for exit activity. However, insurtech exits are still on a general upward trend, with a 5-year CAGR of 22% from 2013 to 2018.

To learn more about our complete insurance technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Insurtech Investors With the Most Activity

The insurance technology (insurtech) industry has seen $27B in total all time funding. Let’s analyze the investors making bets into insurtech and identify the most active firms.

The graphic below shows insurtech investors based on their number of investments into the sector. If an investor participates in two investment rounds in the same company (such as a Series A and Series B), that would qualify as two investments for this graphic.

Insurance Technology Investors With Most Investments
Insurance Technology Investors With Most Investments

As the graphic demonstrates, 500 Startups has made the most bets in the insurtech sector with 39 investments. Plug and Play follows in second place with 27 investments. Examples of companies 500 Startups invested in include Kin Insurance, Indio Technologies, Embroker, and Jones. Let’s see which investors make their way onto this list in 2019!

To learn more about our complete insurance technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Insurtech Funding Remained Stable in 2018

Now that 2018 is complete, let’s examine how funding in insurance technology (insurtech) compares to previous years. The graphic below shows the total annual insurtech funding amounts over time.

Insurance Technology Funding Over Time
Insurance Technology Funding Over Time

As the graphic demonstrates, insurtech funding in 2018 was around the $3.8B mark. It represents a meager 2% increase from the previous year’s funding. Some of the largest funding events in 2018 include a $375M Corporate round for Oscar Health, a $300M Series B for Devoted Health, a $200M Series F for Policybazaar, and a $200M Series C for Bright Health. Nonetheless, insurtech funding grew at a CAGR of 18% from 2013 to 2018. We’re now eager to see if its funding can break away from its relatively steady state and into a growth phase again!

To learn more about our complete insurance technology dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.