MENA: Scope of insurance technology in the region explains modest funding
Source: Middle East Insurance Review | Sep 2023
A growing cohort of InsurTech startups have entered the insurance space to help incumbents digitalise their processes, according to a blog on the website of Wamda, which operates a platform of programs and networks that aims to accelerate entrepreneurship ecosystems across MENA.
The start-ups have managed to garner investor interest. But overall, the volume of investments is likely to stay modest, as the scope of InsurTechs remains limited to a very small part of the value chain, which means that their growth potential is also limited.
In 2022, six new InsurTech companies raised funds amounting to $18.3m, a plunge of more than 55% year over year from $40.56m raised in 2021 over 11 deals.
Saudi Arabia-based Rasan and UAE’s Bayzat bagged the largest rounds so far, having raised $24m and $16m respectively, although the latter was a debt financing round.
In 2023 to date, there have been three deals that attracted financing of $2m. Once considered among the top fundraisers in InsurTech, UAE-based Hala, which had raised $7m in funding, announced earlier this year that it would indefinitely cease its operations.
Given how specialised the insurance market is, raising funds becomes a challenging feat for startups, which prefer to raise funds and strategically work with investors with an insurance background.
Encouraging insurance incumbents to invest in VC funds is essential to attract more funding into InsurTechs said Noria Capital general partner Cillin Flynn. His company is an InsurTech-focused VC firm with offices in Saudi Arabia and the UAE. M