Insurtech ecosystem experiencing record-breaking fundraising level and M&A transaction volumes, says Hampleton Partners

The Insurtech M&A Market Report from international technology mergers and acquisitions advisors, Hampleton Partners, forecasts a record 95 or more M&A deals in 2020, with 48 already banked in the first half of the year. 

Volume has more than doubled since the year 2013, which saw 46 insurtech transactions.

 
With global insurance premiums exceeding USD4.9 trillion in 2017, investor appetite is growing. The fundraise count in the insurtech space has increased 314 per cent over the past six years, growing from 41 fundraises in the first half of 2014 to 170 fundraises in the first half of 2020. There were a total of 274 insurtech funding rounds disclosed so far this year.
 
Value raised has also increased over time, growing from USD557 million in H1 2014 to USD3.5 billion H2 2019. So far in H2 2020, a total of USD2.5 billion has been raised. 
 
Six mega-rounds were responsible for 69 per cent of total funding: Bright Health (USD500 million), Ki (USD500 million), Next Insurance (USD250 million), Waterdrop (USD230 million), Hippo (USD150 million) and PolicyBazaar (USD130 million).

Across transactions closed between July 2019 and October 2020, the proportion of private equity acquisitions came in at a very high 39 per cent.
 
Miro Parizek, founder, Hampleton Partners, says: “Private equity firms are keen to invest in tech companies serving the insurance industry, targeting solutions focused on customer experience through to digital transformation solutions for carriers.”
 
Established insurers are having to maintain relevance and deliver superior customer experience in the face of ‘Big Tech’ entrants to the markets.
 
Amazon recently announced it will be offering auto insurance and services in combination with Acko General Insurance, with the quote-to-bind process taking less than two minutes and all policy-related communication stored on the Amazon platform.
 
As a result, funding and M&A activity is shifting towards more customer-centric and direct-to-consumer digital insurance options. Established insurers are improving their partnership and collaboration strategies with new technology providers.
 
The third quarter of 2020 saw 32 (re)insurer partnerships. These included Hiscox’s partnership with Thimble, on-demand insurance for small businesses and Verily’s partnership with Swiss Re to launch a unit to provide stop-loss insurance which covers unexpected and large employee healthcare costs.
 
Parizek says: “Revenue in the insurtech market is expected to reach USD10.1 billion by 2025. There is no doubt that the M&A, fundraising and partnership activity unfolding at present will continue to thrive as players compete for a piece of this pie in an increasingly digital world.”
 
Hampleton’s Insurtech M&A Market Report covers the following sub-sectors: B2B Insurtech, Insurers, Brokers & Intermediaries, Sales & Back Office Tools, Connected Analytics and Fraud Detection & Forensic Analysis.