Insurtech: An Industry To Watch Despite Lower Funding In 2020Aug 5, 2020

In 2020, we’ve seen more money pour into insurtech–and some high-profile entries and exits. Unfortunately, this doesn’t mean the sector has done particularly well in funding terms in 2020, although that’s to be expected as we see funding starting to slow due to the pandemic

But the rise of insurtech as a whole should not be shrugged.

It’s a separate animal because it’s an industry that touches billions of people and businesses in some capacity.

That, along with the fact that it’s been here for some time makes it ripe for disruption–regardless of the challenges facing startups across industries so far this year.

Reviewing the data

Let’s review  findings of the recent data analysis on the industry.

Some of the big, notable deals from last year include Root Insurance’s $350 million Series E in August 2019 and Lemonade’s $300 million Series D in April 2019.

For an example, insurtech has evolved, take a look at Root Insurance’s model. It uses a driver’s smartphone to assess factors like braking, route regularity and speed of turns to help determine a premium, rather than looking solely at indicators like age and location.

This year has been strange many ways, but primarily because of Covid-19 and the subsequent economic turmoil has affected all sorts of industries, including venture capital. As reported, global venture funding for the first half of 2020 was down from the past two years.

Reflecting on insurtech funding for the first half of this year, from the beginning of 2020 through July 22, $2.6 billion had been raised for insurtech companies across 213 deals. That’s down from $4 billion across 315 deals during the same period in 2019.

Last year was a record year for insurtech funding, so it was difficult to top.  But so far this year it is quite a bit slower.

However, here are some notable moves and raises in the insurtech space: Lemonade, for example, raised $319 million with its IPO and saw its stock surge in its first days of trading. The company’s public debut came after a COVID-19-induced lull in the IPO market.

Hippo Insurance raised $150 million with its Series E funding, arriving at valuation of $1.5 billion. And Pie Insurance reigned in supergiant round, raising $127 million in May.