Global investment in the InsurTech industry surged in 2017, with Europe emerging as a new InsurTech hub outside the US, according to new research from Accenture. The number of InsurTech deals grew 39% globally in 2017, with the total value of deals up 32%, to $2.3bn.
While North America still leads in terms of both the total value and number of deals – accounting for $1.24bn, or 46% of deals – the number of deals there grew only 6% in 2017. In Europe, however, the number of deals increased 118%, accounting for one third of all InsurTech deals globally, and the total value of deals there jumped an astounding 385%, to $679m. Asia-Pacific saw a significant increase in funding, with a 169% rise in deal values, to $358m, with the number of deals rising 27%.
Despite the uncertainty around the UK’s vote to leave the EU, the nation continues its emergence as Europe’s InsurTech capital, with 41 deals in 2017, representing total growth of 117% over the last two years. Deal values vastly increased in 2017, with $364m invested in UK-based InsurTechs, up from $19m the year before.
A catalyst for innovation
The report argued that InsurTech should serve as a catalyst for innovation across the insurance industry, but traditional insurers must recognise that collaborating with InsurTech startups is just one part of this process. Ultimately, innovation needs to become ingrained throughout their organisations.
“The InsurTech industry’s rapid growth reflects investors’ response to consumer appetite for change in an industry sitting on trapped value,” said Mr Roy Jubraj, Accenture’s UK and Ireland insurance strategy and innovation lead. “At the same time, however, insurers must recognise that InsurTech investments alone can’t deliver the levels of change and innovation the industry requires or that its customers expect. The key is having an enterprise-wide innovation strategy that transforms the core business and enables the company to drive growth.”
Property and casualty was the most popular insurance segment for InsurTech investments in 2017, accounting for 42% of global investments, with multiline (26%) and health (18%) rounding out the top three. Personal lines accounted for more than two-thirds (68%) of InsurTech investments, with commercial lines and mixed applications accounting for 26% and 6%, respectively.
From a value chain perspective, marketing and distribution led all areas in terms of InsurTech investment, accounting for more than half (53%) of deals globally. This is evident in the number of startups pitching slick, app-based sales and distribution experiences, as well as those improving the customer claims journey through mobile photo-evidencing or chatbot First Notification of Loss.
The report noted that traditional insurers are quickly getting behind emerging technology companies, as the percentage of traditional insurers’ participating in venture capital investments surged by 63% over the last five years. The most common areas for these investments were health and digital health (14% of such investments), the IoTs (13%), and big data and analytics (9%). M