The sharp rise in investment by venture capital companies and incumbent insurance carriers into insurtech startups has attracted attention from the wider fintech sector.
In its latest Pulse of Fintech report, covering the first half of 2018, consultancy KPMG states that the rising participation in the market is manifesting itself most notablyin alliances geared toward embedding offerings in existing value chains. For example, AXA and ING entered a partnership earlier this year to create a holistic product suite including banking and insurance via digital.
“We are starting to see insurance companies partnering more meaningfully with fintech companies — not just investing in them, but actually working with them to really test out insurtech and understand the impact it could have on efficiencies,” says David Milligan, global lead, KPMG Matchi, and associate director for KPMG in South Africa.
However, insurtech deals don’t tend to reach the heights of other fintech deals quite yet. KMPG cited “megarounds” of more than $100 million for Metromile and Oscar, but neither deal cracked the top 10 fintech rounds in the U.S.
Still, says Brian Hughes, Co-Leader, KPMG Enterprise Innovative Startups Network, and Partner KPMG in the US, “the size of these deals speaks to some of the likely winners in each of these respective sectors.”
At the same time, however, insurers’ interest in emerging technologies is contributing to increased investment in certain categories. For example, blockchain company R3 expanded its services to include insurance, and also cracked the triple-digit-millions of investment this year.
“The undeniable truth is that insurtech is becoming more and more dominant and disruptive in a progressive way in the insurance marketplace than it has been historically. We increasingly see this in the types of insurtech businesses getting traction, how insurtech is being applied to different businesses, and the value chain that insurtech offerings are penetrating,” says Will Pritchett, global lead of insurtech for KPMG.
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