Key takeaways:
The funding environment has toughened, but early stage funding and some leading private players show that opportunities still exist for quality startups.
VC investment pulled back over 50% in H1 2023 YTD compared to H1 2022 and nearly 4x from peak. Insurtech funding is now back to 2018-2019 levels.
The pullback has been mostly at late stage which is down over 60% from peak, while early stage has stabilized at a nearly 30% drop.
While public insurtech valuations have plummeted, several leading private insurtechs have been able to confirm or even increase their valuation in recent months.
Insurance is still an underfunded market, especially in areas such as life insurance.
Insurtech represents a massive $7 trillion opportunity, larger than the Mobility market which received though 5x more funding in 2022-2023. Also Financial Services represents a less than double market size, but received nearly 10x the funding.
Insurtech has also largely focused on the P&C market which attracted over 60% of the funding in the latest years. Life insurance has been particularly underinvested and still awaiting for much needed change.
Operational efficiency is now a must for insurtechs and insurers. Insurtech startups are enabling operational efficiency through the whole value chain.
Insurance was never a growth at all cost market, but the recent financial tightening has stressed this again.
Distribution is still attracting the most funding, but new approaches from hybrid distribution to embedded insurance are still opening new avenues there.
AI was already heavily used by insurance, with variable impact across the value chain, such as in claims automation. Now GenAI opens new possibilities, but it is still to be fully understood which processes will be more impacted.