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.
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.
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.
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.
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!
The insurance technology sector has seen an abundance of activity over the past few years. As we previously analyzed, insurtech funding has shown early signs of maturation and its exit events have seen robust growth.
We will now do a deeper dive of the different components of insurance technology and how they make up this startup ecosystem. We have classified the companies into 14 categories. This blog post will illustrate what these categories are and which categories have the most companies. We will also look at how these categories compare with one another in terms of their funding and maturity.
Insurance Marketplace Is the Largest Insurance Technology Category
Let’s start off by looking at the Sector Map for the insurance technology sector. As of March 2018, we have classified 1503 insurance technology startups into 14 categories that have raised $22 billion. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.
We see that Insurance Comparison/Marketplace is the largest category with 420 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.
We have seen what the different categories making up this sector are and the number of companies in each. What about their funding and maturity in relation to one another? Let’s look at our Innovation Quadrant to find out.
Reinsurance Is the Heavyweight Category in Insurance Technology
Our Innovation Quadrant divides the insurance technology categories into four different quadrants.
We see that the Pioneers quadrant has the most insurance technology categories with 10. The Pioneer categories are in the earlier stages of funding and maturity. The Disruptors quadrant includes Health Insurance, Auto Insurance, and Life, Home, P&C Insurance. These three categories have acquired significant financings at a young age. The Heavyweights quadrant contains the Reinsurance category. This category has reached maturity with significant financing. Reinsurance companies provide insurance products to other insurance companies to help them hedge their bets and streamline their costs. Some example companies are AnalyzeRe, PlaceRe, PeakRe, and EazyRe.
We’ve seen the insurance technology categories and their relative stages of innovation. Let’s now look at how they stack up against one another in terms of their total funding versus company counts.
Health Insurance Startups Have the Most Funding
The graph below shows the total amount of venture funding and company count in each category.
As noted earlier, Health Insurance, Auto Insurance, and Life, Home, P&C Insurance have the highest average funding per company. The above graphic highlights that these three categories also have the highest total funding in insurtech. Among the three categories, Health Insurance leads the sector with over $10 billion in total funding.
Health Insurance contains companies that offer health-related insurance products for consumers and businesses. Some of the best-funded companies in this category are Oscar Health ($893M), Zenefits ($584M), and Clover Health ($425M). It’s also noteworthy that the funding in Health Insurance is 28% higher than the funding in the next category, Life, Home, P&C Insurance.
Conclusion: Insurance Marketplace and Health Insurance Categories Lead Insurtech
From the above analysis, we can see that the Insurance Marketplace category leads the sector in total companies. The Health Insurance category leads the sector in total funding. On the other hand, the Reinsurance category stands out as the Heavyweight category in our Innovation Quadrant. It has reached maturity with significant average funding per company versus other categories. It’ll be interesting to see how the insurance technology landscape will change and develop throughout the rest of 2018.
This conclusion was derived from two key data points:
The Insurance Backend category leads in the number of exits
The Auto Insurance category leads in acquisition amount
We’ll explore these takeaways in some more detail below.
To help set the stage, the graphic below shows insurtech exit activity over time. As you can see, the sector’s exit activity grew significantly over the past few years with a slight drop in 2017 from 2016.
Insurance Backend Leads Insurtech in the Number of Exits
The below graph highlights the number of insurtech exit events by category.
This graph shows that the Insurance Backend category leads the sector with 50 exit events. Its exit activity is more than 1.5 times the next category, Insurance Marketplace, which has 32 exit events.
Insurance Backend contains companies that help insurance companies with their day-to-day operations. They include CRMs for insurance agents, communication tools for insurance companies, and claim filing tools for customers. Some example companies are CHSI Connections, ClaimKit, Shift Technology, and Unirisx.
Let’s now see how insurtech categories compare with one another by acquisition amount.
Auto Insurance Leads Insurtech in Acquisition Amount
The graph below shows the acquisition amounts in different insurtech categories.
We can see from this graph that the Auto Insurance category leads insurtech in total acquisition amount with over $16 billion. Auto Insurance companies offer car insurance and car telematics products. These products generally detect your mileage and driving behavior to customize your insurance plan. Some example companies in this category include Metromile, The Zebra, Clearcover, and Cuvva.
Auto Insurance has seen some large acquisitions in recent years. Esurance was acquired by the Allstate Corporation in May 2011 for $1 billion. DriveFactor was acquired by CCC Information Services in May 2015 for $22 million. Tempcover was acquired by Connection Capital in January 2018 for $16 million.
The acquisition amount in Auto Insurance represents 30% of all insurtech acquisition activity. It’s noteworthy that its acquisition amount is more than 1.7 times the next category, Enterprise Insurance, which has just under $10 billion.
Conclusion: Insurance Backend and Auto Insurance Lead Insurtech Exit Activity
In summary, we have examined insurtech exit activity by the number of exit events and acquisition amount. The Insurance Backend category leads the sector in the number of exit events. The Auto Insurance category leads in acquisition amount.
The following infographic summarizes the total funding of all the companies within each Insurance Technology category. You could see that Health Insurance has the highest funding amount at $1.91 Billion, followed by Auto Insurance at $1.12 Billion. At Venture Scanner, we are currently tracking over 535 Insurance Technology companies in 13 categories across 47 countries, with a total of $4.63 Billion in funding. To see the full list of 535 Insurance Technology companies, contact us using the form on www.venturescanner.com.
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