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article imageInsurtech: Concentration among top 10 players is accelerating

By Tim Sandle     Oct 19, 2020 in Business
A new report from Deloitte finds that Insurtech funding is nearly even with the levels of investment seen in 2019. However, within this coronavirus era growth, the concentration among top 10 players is accelerating.
The report comes from the Deloitte Center for Financial Services, and it is titled “COVID-19 pandemic shifts Insurtech investment priorities.” The report is one of several under the seeries Venture Scanner analysis, exploring insurtech funding.
The economic data shows that the insurtech sector remains robust, although it is becoming more concentrated in insurtechs that are taking a long-term view on the pandemic and adapting for a lasting impact. This is by bolstering virtual customer engagement and operational efficiency.
Key findings from the, as picked out by Digital Journal, are:
2020 insurtech investments are about even with 2019 levels, which were the highest on record, despite the pandemic. The first half of 2020 saw $2.2 billion in fundraising despite economic fallout and is on track to raise the second highest amount of money for any given year. Q1 saw a nosedive in investments, which was followed by a 40% YOY increase in Q2 that has brought 2020 on par with 2019 funding.
U.S. dominance
The U.S. market is claiming most of the funding, with 75 percent of funds raised in the first half of 2020 going to US insurtechs. In addiiton, funding is increasingly being concentrated among a few insurtechs, with fierce competition projected into 2021.
The top 10 insurtechs by size have received about two-thirds of total funding so far this year while the top four claimed 44 percent of total funding (an acceleration from 2019, when the top 10 held 53 percent of funding), tightening competition among the market’s remaining 57 insurtechs. This trend is expected to continue well into next year as investors continue to manage through “portfolio triage” and as in-person financing pitches continue to be disrupted.
COVID-19 efforts matter
Investment trends suggest that venture capitalists are more likely to funnel funds increasingly toward firms that are adapting to the COVID-19 world.
Expect more mergers
Mergers and acquistions are expected to accelerate. In the report, eight deals have been identified so far this year, with more likely to materialize due to disruption caused by the pandemic, competition for funds, creation of stronger offerings by merging adjacent solutions, and legacy carrier acquisitions.
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