Insurtech Experiencing Record-Breaking Fundraising Levels & M&A Transaction Volumes
- 01.12.2020 02:09 pm
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 $4.9 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 $557 million in 1H2014 to $3.5 billion 2H2019. So far in 2H2020, a total of $2.5 billion has been raised.
Six mega-rounds were responsible for 69 per cent of total funding: Bright Health ($500 million), Ki ($500 million), Next Insurance ($250 million), Waterdrop ($230 million), Hippo ($150 million) and PolicyBazaar ($130 million).
Private Equity remains prominent buyer group
Across transactions closed between July 2019 and October 2020, the proportion of private equity acquisitions came in at a very high 39%.
Miro Parizek, founder, Hampleton Partners, said: “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.”
Partnerships between tech and insurance incumbents
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.
Largest three deals – past 30 months
- Aon Plc and Willis Towers Watson agree merger - $30 billion
- Roper Technologies acquires Vertafore - $5.4 billion
- Prudential Financial acquires Assurance IQ - $2.35 billion
The future of insurtech M&A
Miro Parizek concluded: “Revenue in the insurtech market is expected to reach $10.1 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.
Download the Hampleton Partners Insurtech M&A Market Report: https://hampletonpartners.com/insurtech-report