Data Venture

Insurtech: An Industry To Watch Despite Lower Funding In 2020 So Far

Lately, we’ve seen more money pour into insurance technology–or insurtech–and some high-profile fundraises and exits. Sadly, this doesn’t mean the sector has done particularly well in funding terms so far in 2020, although that’s to be expected as we see funding overall trending downward.

But insurtech is not an industry to be discounted.

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Although it isn’t entertainment, software-as-a-service or autonomous vehicles, it’s an industry that touches billions of people and businesses in some capacity.

That, along with the fact that it’s been around for so long, makes it ripe for disruption–regardless of the challenges facing startups across industries so far this year.

A look at the data

Before we dive into the findings of our recent Crunchbase data analysis on the industry, here are a few quick notes regarding our methodology for the data pull.

  • Companies from around the world that fall under industries with “insur” in Crunchbase’s data set (insurtech, auto insurance, commercial insurance, health insurance, insurance, life insurance, property insurance, etc.) 
  • Private-equity rounds are excluded for non venture-backed companies. The data is current as of July 22.

Based on Crunchbase data, 2019 saw the most venture capital dollars invested in insurtech companies over the past five years. About $7.3 billion was invested in insurtech over 548 deals. Although the deal count was down a bit from 2018’s 595 insurtech deals, the dollar volume was up significantly from $5.6 billion in 2018. Translation–although there were fewer deals in 2019, the amounts were larger.

Some of the big, notable deals from last year include Root Insurance’s $350 million Series E in August 2019 and Lemonade’s $300 million Series D in April 2019.

For an example of how far-reaching insurtech has evolved, take a look at Root Insurance’s model. It uses a driver’s smartphone to assess factors like braking, route regularity and speed of turns to help determine a premium, rather than looking solely at indicators like age and location.

This year has been strange in a number of ways, but primarily because of the COVID-19 pandemic. The outbreak and subsequent economic turmoil has affected all sorts of industries, including venture capital. As we reported a few weeks ago, global venture funding for the first half of 2020 was down from the past two years. 

The same can be said for insurtech funding for the first half of this year (and then some). From the beginning of 2020 through July 22, $2.6 billion had been raised for insurtech companies across 213 deals. That’s down from $4 billion across 315 deals during the same period in 2019.

Last year was a record year for insurtech funding, so it was hard to beat. But so far this year it is definitely slower.

However, there were some notable moves and raises in the insurtech space. Lemonade, for example, raised $319 million with its IPO and saw its stock surge in its first days of trading. The company’s public debut came after a COVID-19-induced lull in the IPO market.

Hippo Insurance also raised $150 million with its Series E last month, bringing its valuation to $1.5 billion. Pie Insurance also pulled in a supergiant round, raising $127 million in May.

So while funding is a little slower than what we saw at this time last year, and insurtech doesn’t seem to grab headlines like other, flashier sectors, there’s still time for funding to pick up in the second half of 2020.

Illustration Li-Anne Dias

Update: This story has been updated post-publication to better clarify the methodology used to gather the data.

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