All categories of insurtech deals and mergers have seen significant declines in 2020 as the coronavirus pandemic has seen investment into startups and technology plummet, according to GlobalData, a leading data and analytics company.
GlobalData’s thematic deals dashboard shows that the total value of global insurtech deals has fallen by 80% so far in 2020, after growing by over 100% in both 2019 and 2018. It has seen the leading theme, FinTech, see the value of deals drop by 77%, compared to 142.8% growth in 2019, and 142.8% in 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 on 2019.
Ben Carey-Evans, Insurance Analyst at GlobalData, comments: “Investment has suffered during the pandemic across all industries, however, the scale of the drop, in the Fintech category especially, is alarming. The start-up sector took longer to flourish than in other sectors, such as banking, but it had become very well established by 2019. High profile insurance start-ups were having significant impacts across a range of products lines. It was traditional through partnering or merging with larger insurers, but this investment looks to have dried up.
“It remains to be seen whether this will just be temporary insurers and Venture Capital Funds will return to these investments once the pandemic is over. Insurers will be hit hard by COVID-19, leading to a sharp rise in claims in a range of products, while a number of others are likely to see a decline in GWP due to retention rates falling. Therefore, GlobalData does not expect investment levels to immediately return to 2019 levels as investors become increasingly cautious.”