How The COVID-19 Pandemic Shifts Insurtech Investment Priorities

The pandemic has had a dramatic impact on the entire economy, and the insurance business is no exception.

The socially distanced environment has forced many insurers to focus on technology that can help customers purchase insurance, interact with their policies and file claims online, according to Deloitte. In addition, companies are focusing more on providing more comprehensive offerings instead of point solutions.

The Insurtech Numbers: The good news for the insurtech industry is that the pandemic didn’t appear to negatively impact overall investment. In 2020, insurtech funding hit a record $7.1 billion, according to WillisTowersWatson.

Total funding was up 12% and the total number of funding deals were up 20%. In the fourth quarter of 2020, property & casualty (P&C) insurtechs accounted for 67% of the $2.1 billion in funding raised.

Later-stage companies Hippo, Unqork, Waterdrop, Oscar Health, Bind Benefits and Newfront Insurance each raised more than $100 million in funding in the fourth quarter as investors focused more on the mature end of the pipeline.

See Also: Best Private Health Insurance

Investment Themes: Two major investment themes that are getting a lot of attention in the insurtech space are data collection and analysis and artificial intelligence.

By leveraging AI and data analytics, insurance companies will be able to target the right offers to the right potential customers.

In the health insurance space, wearables and biometric devices can provide data such as daily steps taken, calories burned, sleep patterns and even glucose levels. All of that data can be used in the underwriting process. Companies are also investing in genomics, studying the impact genes have on a person’s health and mortality.

Related Link: Pandemic-Induced Global Insurance Trends Could Signal Market Boom

Biggest Recent Funding Deals: Here’s a rundown of the largest insurtech funding deals of the fourth quarter:

• Hippo, $350-million Series F funding by Mitsui Sumitomo Insurance Venture Capital. Hippo leverages the power of data collection and analytics to streamline the quoting and sales process.
• Unqork, $207-million Series C funding led by Aquiline Capital Partners, BlackRock and Broadridge Financial Solutions. Unqork is a software-as-a-service platform that helps companies bring complex, regulated products to market without writing a single line of code.
• Waterdrop, $150-million Series D-II funding by Tencent. Waterdrop is focused on addressing the problem of rising medical fees.
• Oscar Health, $140-million Series F funding led by Baillie Gifford & Co., Coatue Management, Dragoneer Investment Group. Oscar is a technology-driven consumer-focused health insurance company.