10 Apr Insurtech: follow the money
From policy-comparison engines to tech-enabled health coverage and insurance tools for on-demand workers and use cases, startups are invading the multi-trillion dollar insurance industry — and investors are chasing them. Here's a brief rundown of what's happening in the world of insurance tech startups.
Companies targeting the insurance tech space raised $2.12B since 2010, a whopping $1.39B of which has come since the start of 2014. 2015 is already the biggest year on record for insurance tech, as the chart below highlights, spurred by Zenefits’ huge $500M round.
In 2010, the Affordable Care Act was signed into law in the United States, creating new opportunities for consumer health-insurance providers. And since the start of 2010, 56% of all insurance-tech startups are providing solutions aimed at health insurance — more than all other insurance markets combined. Health insurance tech companies that have raised funding since the start of 2014 include Oscar, Gravie, Stride Health, Collective Health, and Navera. The remaining 44% of companies that raised funding over the period spanned a diverse set of insurance markets, and included auto insurance comparison engines, insured storage services for bitcoin, and crop insurance tools.
Since the start of 2010, over 290 different investors (across all types) completed a deal in the insurance-tech ecosystem. In 2010, the number was less than 20. The new investors included VCs — such as Founders Fund and Andreessen Horowitz — as well as corporate venture capital and strategic investors, including Mayo Clinic and BlueCross BlueShield Venture Partners. The visualization below highlights the rapid investor growth. (The graph’s green lines connect investors to the companies they’ve invested in.)
From Northwestern Mutual to Ping An to Transamerica, a coterie of the largest insurance providers in the world are rapidly increasing their investment activity to private tech companies. Indeed, tech startup deal activity by insurance companies and their corporate venture arms rose 460% YoY in 2014. Since 2010, insurance companies have participated in $1.78B in funding to tech companies covering a broad array of companies ranging from Uber to Betterment to Coinbase. (Note: More on the strategic insurance investors I covered is here.)
What pockets of tech are insurance players most bullish on? There are a couple of the key areas where insurance firms have targeted. Among the hot areas are price comparison, where insurance giants have invested in comparison startups for parking, auto insurance and car repair among others, as well as lending and robo-advisors.
Breaking down the financing data by geography, we see that nearly 80% of deal activity since 2010 went to U.S. startups, with India being the largest international market for activity. Within the U.S., California has taken 40% of insurance-tech deals since 2010, while New York-based startups took 16%. Massachusetts came in third with 7% of deals to U.S. insurance-tech startups.
As software eats the insurance industry, startups are attacking a wide range of different pain points. The graphic below highlights a selection of the diverse insurance-tech startups active in today’s market that have received investment.
This article originally appeared on LINKEDIN written by Matthew Wong, Senior Analyst at CB Insight