US$15.8 billion of global InsurTech funding in 2021 breaks all records – 2022 off to steady start

US$15.8 billion of global InsurTech funding in 2021 breaks all records – 2022 off to steady start 150 150 Haggie Partners

Global investment in the InsurTech sector broke all records in 2021. Total funds invested, at US$15.8 billion, was the highest annual capital inflow ever – more than in 2020 and 2019 combined. The year’s 564-deal total is another record. New high numbers were also reached for international participation, unicorn creation, IPOs, and single-deal size (when Integrity Marketing Group raised an incredible $1.2 billion in December), according to the inaugural Global InsurTech Report from Gallagher Re, the global reinsurance broker.

Over the course of 2021, some $9.4 billion was invested into Property & Casualty InsurTechs, with the balance of $6.4 billion – about 40.5% of the total, following a huge uptick in Q4 – directed into Life & Health companies. The rise in total funding in the final quarter of last year was driven by 13 ‘mega-round’ deals. They accounted for 71% of the $5.3 billion invested during that period. Alongside these, 2021 Q4 was also – until the most recent first quarter of 2022 – the largest-ever for Seed, Angel, and Series A funding rounds, which totalled $635 million.

Dr Andrew Johnston, global head of InsurTech at Gallagher Re, said: “An incredible upwards trajectory of global InsurTech funding has occurred during the past nine years, after we started tracking it in 2012, culminating in the record-breaking $15.8 billion total for 2021. By the end of 2021, an enormous $41.65 billion had been invested globally into InsurTechs across 2,249 deals in 63 countries. It included 99 mega-round deals, which accounted for $21.88 billion of the total. Therefore, more than half of all the investment (52%) deployed during this period went into only 4.4% of all InsurTech deals.

“InsurTech investment growth over the past decade has been incredibly impressive, and there’s no slowing down for the time being, with the first quarter of 2022 recording $2.2 billion worldwide. While ‘only’ 43% of the total global investment recorded when compared with the prior quarter [2021 Q4], 2022 Q1 saw parity between quarters in terms of total deal flow [deal count], with a very impressive 143 deals recorded.”

Pointing to the fact there were fewer (only five) mega-rounds recorded in the first quarter of 2022, he added that: “This may be an indication that capital invested is actually becoming democratised – a more equally distributed spread of total capital invested. This possibility is further bolstered by the fact that 2022 Q1 observed the highest ever-recorded participation of early-stage investment, with a highly impressive $660 million invested into InsurTechs globally at their earliest stages.”

Commenting more broadly on the funding and deal data, Dr Johnston concluded: “Much of the money, in more recent years at least, has been invested into companies that would not necessarily have been labelled InsurTechs five years ago. Since almost all new ideas and entrants now have a technological angle, it becomes harder to separate the two. If we were to look back at every single insurance-sector investment since technology was first truly yoked, and reclassified the investment data to the current broader use of the term, InsurTech investment’s recent worldwide growth trajectory might look a little less impressive and stark.

“The vast majority of new insurance projects, ventures, and businesses will be heavily supported by tech. Technology will be the platform, enabler, and product that continues to keep our industry relevant and cost efficient, so the label ‘InsurTech’ needs redefinition.”

The quarterly series of Gallagher Re Global InsurTech Reports in 2022 will focus on the theme of ‘Global trends, and regional idiosyncrasies’ with each report looking at specific geographies, beginning with the Americas. The current report therefore opens with a snapshot of the region’s InsurTech landscape. It notes that at year-end 2021, the United States had seen more InsurTech investment – both in terms of cash and deal count – than the next 60 countries combined. Up until the end of 2021, the region had hosted 54.62% of all deals completed, raising $27.2 billion through 1,237 rounds, of which $26.5 billion was raised by US companies. The report also focuses on the most recent quarterly investment statistics for the region.

The April Report also includes case studies of the InsurTechs Root, a full-stack, risk-bearing personal lines insurance company; Mexico’s, a digital health insurance MGA in partnership with Swiss Re and Prevem Seguros; and Foxquilt, which develops, underwrites, and distributes its own commercial insurance products in the US and Canada with the backing of Munich Re.

The Report’s ‘Deal of the Quarter’ explores the transaction that made Latin America’s first unicorn, Betterfly. The digital health InsurTech automatically tracks individuals’ good habits and rewards them with no-cost life insurance coverage. The ‘Regional Expert’s View’ section contains an article by Manuel Almenara, vice president of strategic partnerships at Swiss Re and co-founder of Peruvian InsurTech Hello ZUM; and a discussion with Nigel Walsh, managing director at Google Cloud, features in ‘The Role of Big Tech’.

‘Analyst Hour’ sees Matt Carletti, senior research Analyst at JMP Securities, present his six InsurTech-investment lessons-learned, while ‘Technology Spotlight’ explores how Risk Placement Services (RPS) and its embedded e-trade platform bring efficiency to the commercial insurance industry.

Also included is a Q&A with Jonathan Hendrickson, vice president and head of InsurTech development at Gallagher, who commented: “It’s been around for a number of years, but InsurTech is still in the earlier innings. We’ve yet to see some of the full benefits of the innovation and enablement investments which have been made.

“In absolute terms, the $15.8 billion invested in 2021 is a big number, but if you look at it as a share of global venture funding, the sector is underinvested relative to its share of GDP. For the insurance and brokerage industry, as we start to see some of the investments mature, I expect we will see even greater improvements in customer experience, data insights, and proactive risk management and mitigation.”

View the full report here.