In­sur­ance-Fo­cused Star­tups Take Fund­ing Lead

Digital Insurance - - INDUSTRY BRIEFS -

Money is pour­ing into the fi­nan­cial ser­vices startup com­mu­nity, and in­sur­ance-fo­cused com­pa­nies are ben­e­fit­ing.

So far this year, the insurtech sec­tor, which in­cludes com­pa­nies cre­at­ing new un­der­writ­ing, claims, dis­tri­bu­tion and bro­ker­age plat­forms, as well as en­hanced in­sur­ance-spe­cific, cus­tomer-ex­pe­ri­ence of­fer­ings, has seen 47 ven­ture cap­i­tal in­vest­ment deals to­tal­ing $1 bil­lion, com­pared to 74 deals to­tal­ing $2.5 bil­lion in all of 2015, ac­cord­ing to “Pulse of Fin­tech,” a quar­terly global re­port from KPMG In­ter­na­tional and CB In­sights that ex­plores eq­uity trans­ac­tions to ven­ture cap­i­tal-backed fi­nan­cial-tech­nol­ogy com­pa­nies.

That’s de­spite the fact that for the fin­tech sec­tor as a whole, deal ac­tiv­ity ac­tu­ally fell in Q2, hit­ting a five-quar­ter low in the United States with just 97 deals, com­pared to 130 in Q1. Fin­tech star­tups also saw fund­ing de­cline to $1.3 bil­lion in Q2 2016 — com­pared to $2.4 bil­lion for the same quar­ter last year — and drop 24% com­pared to $1.7 bil­lion in Q1.

“We are see­ing a lot of align­ment be­tween insurtech com­pa­nies and the car­ri­ers,” says Gary Plotkin, prin­ci­pal of KPMG’s in­sur­ance man­age­ment con­sult­ing prac­tice.

In­sur­ers think that star­tups can help them side­step the risk and ex­pense associated with large-scale le­gacy-mod­ern­iza­tion projects, Plotkin adds.

“The big­gest con­cern in­sur­ers have is the abil­ity to cap­ture the cus­tomer. Th­ese in­surtechs of­fer light-weight ca­pa­bil­ity to move for­ward,” he ex­plains.

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