Insurtech Partnerships On A Roll, While Funding Sees Sunniest Year

Globally last year, insurtech investment continued to grow amid an unprecedented business environment. Total funding across private investment deals reached an all-time high of US$7.1 billion with 377 deals – the highest in any year to date. Compared with 2019, annual funding rose by 12% while deal volume by 20%. The last quarter ended with insurtechs raising US$2.1 billion from 103 deals. Within insurtech, P&C continued the trend of higher funding and deals than life & health, amassing 67% of funding and 73% of deals in Q4 2020.

Late stage companies Hippo, Unqork, Waterdrop, Oscar Health, Bind Benefits and Newfront Insurance breached US$100 million funding, with six mega-rounds for the quarter totaling US$1.1 billion. Direct-to-consumer home insurance continued to raise funding: Hippo with its US$350 million Series-F and France’s Luko’s US$60 million Series-B for its sensor-based D2C home insurance.

Over the last year, Willis Towers Watson made available a compilation of strategic partnerships inked during each quarter. Totaling a little over a hundred, underlying these partnerships are broader trends that define the tectonic shifts the industry is witnessing. As delineated in an earlier post, the momentum in strategic partnerships is expected to continue through 2021. Understanding the trends from previous quarters is fair basis to predict what’s likely to emerge in the year ahead.

Among these 100 odd partnerships, the lines of business which witnessed the highest number of partnerships were auto insurance followed by property and life insurance. The other active lines were SME, cyber and health insurance. In terms of specific value drivers these partnerships sought to realize, the highest numbers were geared to distribution partnerships followed by access to digital platforms, value added services and use of data, analytics and artificial intelligence in fraud detection, claim automation, satellite imagery and chatbots.

The most active carriers were Nationwide and Hiscox.

Hiscox, a leading small business insurer joined forces with Thimble, an insurtech that helps small businesses by offering short-term liability insurance, available by the hour, day or month. Customers can modify coverage based on needs, add additional insureds or even pause coverage. Hiscox teamed up with LeakBot to leverage its leak detection system, becoming the first UK insurer to offer LeakBot’s services gratis to new and existing building insurance customers. Hiscox has also partnered with InsuranceBee to give independent agents instant access to its small business policies. Other key partnerships are with Concirrus for behaviour based analytics for marine and Getsafe for contents insurance distribution.

Nationwide partnered with IMS, a provider of connected car solutions, for its SmartMiles pay-per-mile insurance. It announced a partnership with IoT company Samsara to offer video telematics to E&S customers with 11+ commercial trucks, to protect against external threats. Its partnership with Notion is to leverage smart home monitoring technology. With Toyota, Nationwide has teamed up to start BrightDrive to give drivers a discount based on customer’s driving behavior. Another partnership is with telematics provider Azuga to offer customers advanced telematics systems with fleet management and GPS tracking.

The pattern of partnerships reveals that carriers do not have a single, dominant value driver for partnerships in business lines and instead have 2-3 drivers that account for more than three-fourths of all partnerships. There were few exceptions, such as in auto insurance, where close to half of all partnerships were to advance the use of telematics and usage based insurance. In property insurance, the number of strategic partnerships with distribution themes were about the same as those using technology drivers such as AI and IoT. In life and annuities, partnerships were spread across more themes, covering distribution, value added services and less on technology areas such as data, analytics or AI. Product innovation theme was found to be high in the SME segment, indicating this was a preferred niche for insurtechs.

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