The quarter saw 132 InsurTech deals, compared to 143 in Q1. The lower Q2 number includes six mega-rounds, including four in the US, which raised $948 million in total, according to the latest quarterly Global InsurTech Report from Gallagher Re, the global reinsurance broker, published today.
Q2 saw 40 L&H investments of $918 million, up 12.4%, and 92 P&C InsurTech deals worth $1.49 billion in total. P&C deal flow was down 13.2%, but total investment was up 5.9% on Q1, while average deal size was $20.73 million. Interestingly, the early-stage InsurTech funding of $368 million in Q2 represented a decline of 44.4%% compared to Q1, and a drop of 26.1% year-on-year.
An about-average 45.5% of deals benefited US-based InsurTechs, but UK ventures saw a big increase – representing 12.1% of total global deals in Q2 2022, up four points. (Re)insurers made 28 of the Q2 investments, five fewer than the previous quarter.
Their Series A investments comprised almost a third of (re)insurer deals, the highest since Q2, 2020, driven by strategic investments announced as partnerships.
Dr Andrew Johnston, Global Head of InsurTech at Gallagher Re, said: “Global markets have struggled since the beginning of the year, with even the most robust stock valuations taking a beating. InsurTechs which are set to deliver growth and profitability over the long-term now present confident investors with an excellent opportunity to diversify their portfolios. A number of them will undoubtedly change the face of our industry, or parts of it, and in some cases are already doing so. As markets begin to recover, those InsurTechs should rise to the surface with the utmost buoyancy.
“The recent downgrade of company values could lead to M&A and divestitures that were unlikely six months ago,” he continued. “It has caused some InsurTechs to coalesce, and thrown cold water over many other InsurTechs that previously considered themselves special or unique. In the wake of value realisation, certain InsurTechs should offload, and certain investors – even certain InsurTechs – should acquire. For both sides of the trade, this moment could be seen as an enormous opportunity.”
The quarterly series of Gallagher Re Global InsurTech Reports in 2022 focus on specific geographies. The Q2 2022 report covers Europe, the Middle East and Africa, and opens with a ‘snapshot’ of InsurTech in the region. In the past decade the EMEA InsurTech ‘scene’ has exploded, with 41 countries in the region now home to funded InsurTechs, more than any other. By the end of June 2022, the 701 deals completed in EMEA accounted for roughly 28% of all deals ever completed, and were worth $8.5 billion in total.
Although, in the most recent quarter, EMEA boasted only one of six mega-round deals.
The August Report also includes case studies of the InsurTechs Hedvig, a full-stack, risk-bearing personal lines insurance company in Sweden; EasySend, a B2B technology provider focused on customer data intake processes; Descartes Underwriting, a commercial P&C insurer delivering parametric products targeting climate (change) related perils; and Apollo Agriculture, which provides farmers in sub-Saharan Africa with packages including finance, insurance, and inputs such as seed.
The Report’s ‘Deal of the Quarter’ explores Paris-based Alan, a digital health insurance company. Its €183 million Series E round in May took its total valuation to €2.7 billion. Alan develops and underwrites insurance products through its subscription-based software, and aims to make personal, proactive, holistic health part of people’s daily lives. This quarter’s ‘Regional Specialist’s View’ is provided by Florian Graillot, co-founder and Partner at astorya.vc, a European insurance investment fund; while the ‘Industry View’ comes from Gallagher Re’s Printhan Sothinathan and Brian Ingle. Respectively CEO and President of Gallagher Re Global Analytics, they share their observations on the role of InsurTech from the viewpoint of a major global broker.
In ‘Analyst Hour’, William Hawkins, Director of Research – Europe at Keefe, Bruyette & Woods, explains why his firm cares about InsurTech, then Dr Tunde Salako of Africa InsurTech Lab explains his view of the role of the InsurTech ecosystem. Finally, ‘Technology Spotlight’ explores how Gallagher Drive optimises clients’ risk management programmes with placement, claims analytics and benchmarking.
Gallagher Re’s CEO of Global Analytics, Printhan Sothinathan, said: “When we see InsurTechs taking unique approaches to leveraging new and emerging data with advanced analytics, we assist in commercialising their products to offer our clients differentiating products. Looking at the property catastrophe space, our clients look to us to share a view on how different vendor models work and compare, in order to make informed decisions on their property portfolio management. We believe in a future where individual data components will vary in usefulness and/or relevance over time. Meanwhile, InsurTech is putting increased pressure on the industry to continue to evolve and innovate.”
Brian Ingle, President of Global Analytics at Gallagher Re, said: “We are seeing interest move beyond understanding the hazard and financial model operations into areas like stress-testing climate scenarios, and verifying that the data feeding models is a most-accurate representation of exposure characteristics. Each task in this process can be enhanced with specific partnerships, and thinking about the end goal of writing a more profitable portfolio. We are experts in divining the systemic risk that our clients should look to trade, and since that risk is evolving, we are constantly on the lookout for new tools and partners.”
View the full report here.
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