The Insurance Technology (insurtech) sector is seeing a lot of activity. How have its funding trends evolved over time? On our insurtech research platform, we have analyzed the data through 2017 and can conclude that the investments in insurtech continue on a healthy trend despite a decline in certain metrics.
We have come to this conclusion from the following three takeaways:
- The number of insurtech deals has been growing consistently year over year
- The number of insurtech investors participating in the deals has been on an upward trend
- Insurtech funding amounts have seen a decline over the last few years
We will illustrate these takeaways with a series of graphics to show the trend of insurtech investments over time.
Annual Insurtech Funding Events Growing Consistently
We will start off by examining the annual number of insurtech startup funding deals, stacked by quarters.
This graph illustrates that the number of insurtech funding events saw consistent growth year over year. Specifically, the CAGR in funding events from 2012 to 2017 is 26%. In addition, the number of funding events in 2017 was 108% of that in 2016.
We have seen that insurtech funding events are showing steady growth, but what about the investor interest in the sector?
Insurtech Investor Interest Has Been Growing
To gauge how investors are feeling, let’s look at the total number of insurtech investors who participated in each financing round.
This graph shows that insurtech investor interest has been growing for the past few years and then leveled off in 2017. The CAGR in the number of participating investors from 2012-2017 is 39%, and the 2017 total has declined from the 2016 total by 3%.
We have seen that insurtech funding events are increasing steadily and investor interest is seeing growth for the most part. Let’s now examine the funding amounts at the annual level to complete the picture on the state of insurtech investment.
Insurtech Funding Amounts Declining Over the Last Few Years
Let's now analyze the insurtech funding amounts over the years stacked by quarters.
Upon first glance, insurtech funding amounts saw explosive growth up until 2014 and then declined steadily year by year afterwards. In fact, the CAGR in funding amounts from 2012 to 2017 is 25%. Moreover, the funding in 2017 was only 81% of that in 2016.
Yet upon closer analysis, we find that the massive funding amounts in 2014 and 2015 were caused by a couple large outlier funding rounds in the sector. In Q4 2014, the Chinese insurance company Ping An raised a $4.75 billion post-IPO equity round. In Q2 2015, companies such as ZhongAn, Zenefits, and Oscar Health collectively raised $1.58 billion. These large outlier funding events all had a skewing effect upon the trend of annual insurtech funding amounts.
Conclusion: Despite Some Metrics Declining, Insurtech Funding Continues on a Healthy Trend
In summary, the above graphics show that insurtech funding events experienced steady growth at the annual level, and its investor interest is generally increasing. However, insurtech funding amounts have seen a decline in recent years, largely as a result of some outlier funding rounds. These takeaways lead us to conclude that insurtech funding is showing general signs of health. It’ll be interesting to see how this sector’s investment trend turns out in 2018.