The top three largest rounds were Next Insurance, Coalition and Zego
There has been a record number of mega deals during the first quarter of 2021, which has equated to more than any other three-month period.
This is according to the new Quarterly Insurtech Briefing from Willis Towers Watson (WTW), it revealed that the largest funding rounds included Next Insurance, Coalition, Zego, Sidecar Health, Pie Insurance, Clarify Health, Corvus Insurance Agency, and TypTap.
Eight companies accounted for more than $1.13bn in funding during the quarter, 44% of the total raised.
The increase in deal activity was driven by a percentage point increase of more than 12 in early-stage deals compared to Q4 2020, and a ten-percentage point increase from Q1 2020. And around 60% of this quarter’s deals went to early-stage companies.
Dr Andrew Johnston, global head of insurtech at Willis Re, said: “The record level of activity this quarter reflects our industry’s ever more widespread willingness to engage and adopt technology, which continues to grow at an unprecedented rate.”
The top three largest rounds were Next Insurance which is valued at US$4bn doubling its value, as well as Coalition and Zego, both achieved unicorn status with valuations at US$175bn ans US$1.1bn respectively.
WTW pointed out that while mega rounds are typically associated with late-stage companies (Series D) this quarter saw mainly Series C growth rounds potentially indicating the expansion of funding requirements earlier on in the cycle.
This marks a new quarterly high for the number of mega-round fundraisings of $100m or more.
It follows fundraising activity in the global insurtech sector continuing to rebound from the impact of the Covid-19 pandemic.
Strongest on record
WTW also found that more specifically the total funding during Q1 grew by 180%, compared with Q1 2020 which was hit by fears around the Covid-19 pandemic.
Meanwhile, global investment in the insurtech sector reached a new quarterly high of US$2.55bn across 146 deals with the first quarter of 2021 being the strongest on record.
The latest total grew by 22% relative to more comparable Q4 2020, while the number of discrete deals soared 42% higher than during the previous quarter.
WTW said that investment was driven by property and casualty focused companies – which represented 69% of deal share.
Johnston continued: “Technological innovation gains ground only when a community emerges to support it, and Covid-19, more than any other factor, has rapidly accelerated the change that was already well under way.
“Covid-19 has helped strengthen the narrative, and demonstrably illustrate the results technology can deliver, which are now being achieved at scale.”
“That said, the solutions offered by insurtechs must make intellectual and commercial sense to their target users, whether they’re insurers, brokers, or insurance buyers.
“For them, the technology itself is the least interesting part of the initiatives. Unfortunately, a failure to understand these realities, in addition to the general difficulty of entering our industry as a nascent business, means that many insurtechs will most likely never achieve the grandeur of their aspirations.”
Although the US has been a long-standing hub for insurtech in new geographies, 2020 also saw 38 different countries raise investment, up from 29 in 2016.