With the pandemic proving challenging for insurtechs, Global Data reveals a significant drop in insurtech deals worldwide but points out that Lloyd’s Lab fifth cohort gives hope to the industry
The total value of global startups and deals plummeted by 80% in 2020.
Analytics and data firm Global Data stresses that start ups, which includes insurtechs, could be essential in providing innovation to help recovery.
Ben Carey-Evans, insurance analyst at GlobalData, said: “The dramatic fall of global insurtech deals in 2020 is a shock after it grew by over 100% in both 2019 and 2018. The 2020 figure is just up to July, so the scale of decline will be reduced by the end of the year. However, GlobalData still expects 2020 to show a substantial reduction [compared with] 2019.”
“Insurtechs merging with incumbents, as opposed to challenging them, is a long-running theme in insurance, and it seems this is set to continue,” Carey-Evans continued. ”Start-ups would struggle immensely to underwrite premiums, especially in the current climate, but their digital and analytics expertise could be priceless to larger companies.”
Lloyd’s Lab fifth cohort includes ten companies that were selected from 140 applicants.
This, Global Data suggests, highlights that new ideas and innovation are still present in the insurance market, despite the challenging conditions presented by the pandemic.
Carey-Evans added: “All ten start-ups are looking to offer digital solutions and data analytics, as opposed to being consumer facing. While insurers may not be looking to invest large sums at present due to pressure on profitability, successful insurtechs like these could help increase process efficiency and gain better insights from the wealth of customer data they hold.”