Europe turns into key insurtech hub

Global investment in insurance technology surged in 2017, with Europe emerging as a new insurtech hub outside the US, according to new research from advisory firm Accenture.

The number of insurtech deals increased 39 percent globally in 2017, with the total value of deals up 32 percent, to $2.3 billion, according to the report titled “Fearless Innovation: Insurtech as the Catalyst for Change Within Insurance.”

While North America still leads in terms of both the total value and number of deals – accounting for $1.24 billion, or 46 percent of deals last year – the number of deals there grew only 6 percent in 2017. In Europe, however, the number of deals increased 118 percent, accounting for one-third of all insurtech deals globally, and the total value of deals there jumped 385 percent, to $679 million. Asia-Pacific saw a significant increase in funding, with a 169 percent rise in deal values, to $358 million, with the number of deals rising 27 percent.

The UK remains popular

Despite the uncertainty around the UK’s vote to leave the EU, the nation continues its emergence as Europe’s insurtech capital, with 41 deals in 2017, representing total growth of 117 percent over the last two years. Deal values vastly increased in 2017, with $364 million invested in UK-based insurtechs, up from $19 million the year before.

“The insurtech industry’s rapid growth reflects investors’ response to consumer appetite for change in an industry sitting on trapped value,” said Roy Jubraj, Accenture's UK and Ireland insurance strategy and innovation lead. “At the same time, however, insurers must recognize that insurtech investments alone can’t deliver the levels of change and innovation the industry requires or that its customers expect. The key is having an enterprise-wide innovation strategy that transforms the core business and enables the company to drive growth.”

P&C leads insurtech growth

The research reveals that property/casualty was the most popular insurance segment for insurtech investments in 2017, accounting for 42 percent of global investments, with multiline (26 percent) and health (18 percent) rounding out the top three. Personal lines accounted for more than two-thirds (68 percent) of insurtech investments, with commercial lines and mixed applications accounting for 26 percent and 6 percent, respectively.

From a value chain perspective, marketing and distribution led all areas in terms of insurtech investment, accounting for more than half (53 percent) of deals globally. This is evident in the number of startups pitching slick, app-based sales and distribution experiences, as well as those improving the customer claims journey through mobile photo-evidencing or chatbot First Notification of Loss.

Traditional insurers pile in

The report reveals that traditional insurers are quickly getting behind emerging technology companies, as the percentage of traditional insurers’ participating in venture capital investments is up 63 percent over the last five years. The most common areas for these investments were health and digital health (14 percent of such investments), the internet of things (13 percent), and big data and analytics (9 percent).

“Insurtech is no longer just a target for private equity and venture capital — it’s a global phenomenon,” said Michael Costonis, who leads Accenture’s insurance practice globally.

“Insurers are playing a big role in helping reshape the technology landscape across the industry, making investments beyond wearables and telematics to seize the opportunity that exists within distribution to strengthen the customer experience. The next step for insurers is to use insurtech as a springboard to innovate across their entire organization. After all, $2.3 billion is a small slice of the pie when you consider that insurance is a $4.2 trillion industry.”

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