P&C insurtechs attracted $1.7 billion of investment last year. Here’s a closer look at the booming investment landscape, including three leading startups.
As previously discussed on this blog, the insurtech investment space might be the most interesting part of the global insurance industry right now. With each passing year, insurtechs become more expansive in every sense of the word, with growing geographic and functional diversity. Analysis from Accenture Research shows that in 2018 the number of deals and total investment attracted both reached new highs, and the innovations on display can be truly breathtaking. It can be a challenge to distinguish tomorrow’s game-changing new tech from a flash-in-the-pan, of course, but that’s part of what makes the world of insurtechs so exciting.
One important driver of the insurtech boom is the ongoing digital transformation of the global economy. The most recent Accenture Tech Vision for Insurance survey found that 58 percent of insurers think that major tech innovators like Alibaba, Amazon, and Google will be major threats to their businesses. As a result, they are partnering with insurtechs to build their tech capabilities.
Each sector of the insurance industry has a unique relationship with insurtech. In a previous blog post, we looked at some of the leading health sector insurtechs. In this post we’ll take a similar approach to the P&C sector.
One of the most striking aspects of the P&C sector when it comes to insurtech investment is the number of deals it attracts. Since 2010, Accenture Research analysis has identified 642 different P&C insurtech investment deals. In six of the eight years analyzed, the P&C sector attracted a greater number of deals than any other sector.
It is interesting to note that total investment does not track with number of deals as closely as one might expect. P&C insurtechs attracted $3.9 billion of investment from 2010-2018. The health sector, meanwhile, attracted $5.47 billion of investment over the same period in 338 different deals—less than half the number of deals as P&C.
Another interesting angle of Accenture Research’s analysis of insurtech investment is the sheer growth of the space since 2010. In that year, P&C insurtech attracted $63 million of investment. This figure represents 42.8 percent of the total insurtech investment that year: $147 million.
Eight short years later, P&C insurtechs attracted $1.7 billion of investment. That’s almost 12 times more than all of the money invested in insurtechs in 2010. Yet the P&C portion of overall investment for 2018 actually shrank slightly, down to 39.6 percent. This vividly demonstrates the amazing growth of insurtech investment we have seen since 2010.
So who are the P&C insurtechs at the heart of these deals? With so many deals—193 in 2018 alone—going through each of them would be exhausting. Let’s look instead at some of the biggest players. Accenture Research has identified three P&C insurtechs that were involved in the biggest investment deals of 2018. Here are some notes on each.
Cambridge Mobile Telematics
Founded in 2010 by two MIT professors, Cambridge Mobile Telematics (CMT) is a pioneer in applying the Internet of Things and other New Digital Age tools to the auto insurance market. The insurtech’s signature product is DriveWell, which provides insights on driver and vehicle behavior to insurers, government agencies, and other industry stakeholders. DriveWell has been used on six continents. CMT claims its use has been shown to make drivers safer—and accelerate customer growth for insurers.
Last year, CMT announced a $500 million deal with SoftBank Vision Fund. It plans to use the funds to accelerate the adoption of DriveWell and grow its capabilities in new areas like automated crash and claims management.
This Milan-based insurtech was founded in 2015. It aims to simplify the customer experience for auto insurance through a combination of online policy sales and a network of affiliated body shops and service centers throughout Italy.
Since launch it has attracted 250,000 customers, hit €65 million (US$74 million) in annual revenue, and grown its network of service centers over to 1,000 locations. In late 2018, Prima Assicurazioni announced that it had raised €100 million ($113 million) in private equity funding, which it will use to develop new technology and expand its marketing and sales teams.
Root Insurance Co.
Root is an American insurtech focused on automobile insurance that takes a novel approach to risk management.
Instead of pricing risk with actuarial tables and demographic data, Root uses a smartphone app. A customer’s phone collects data on their driving behavior, including braking, speed of turns, driving time and route consistency, to determine who is a safe driver and who is not. Root only insures drivers who pass the “test drive” period with the app. By not insuring risky drivers, Root says it can save customers up to 52 percent on their auto insurance. Root is currently available in 25 states, and is working on expanding into another nine.
In 2018, Root announced that it had secured an additional $100 million in funding.
Stay tuned for more coverage of the insurtech space on this blog.