Insurance startups have raised billions as industry players fight tech disruptors
The once sleepy world of insurance has become the hot ticket for venture investors.
Insurance technology companies have raised multiple billions of dollars in the past four years as venture capitalists finance industry disruptors and enabling technologies for established players to fend off new technology-based challengers.
In the month since tech-enabled car insurance startup Root Insurance joined the billion dollar club after its $100 million investment round, new investments in startups serving insurers in categories like life insurance, liability insurance, and — most notably — in insurance assessment and analysis services illustrate both the pace of dealmaking in the category and the breadth of technologies being developed for the industry.
In the second quarter of 2018, insurance technology investments totaled $527 million in 71 deals, according to a quarterly survey by Willis Tower Watson Securities. While that total amount committed was actually down significantly from the $985 million across 64 transactions in the second quarter of 2017, the total number of deals — at 71 — actually went up.
No investment better illustrates the opportunity for investors to play both sides of the insurance industry against each other than the recent $20 million extension Slice Labs raised to an original $11.6 million Series A round which closed in October of 2017. It’s not normal. But abnormal is the new normal for insurance technology investing.
Strategic investor The Co-operators, a $3.6 billion collective of Canadian insurance cooperatives, led the extension with participation from the company’s previous investors, XL Innovate, Horizons Fund, and Munich Re/HSB Ventures, and SOMPO, and additional new investors Vero Norte, the investment arm of Grupo Sura and JetBlue Technology Ventures.
Slice now offers what it calls “insurance cloud services”, which basically takes the insurance modeling and approval methodologies that other companies have raised significant money to create standalone businesses with, and white labels them for established insurance providers.
It’s a bit of a pivot for Slice, which initially launched with the thesis of providing an on-demand insurance policy and coverage for anything anyone wanted insured.
If Slice is trying to give insurers the ability to build their own tools in-house and fight back against a deluge of startups, Covr Financial Technologies is trying to give those insurers new channels to sell through as they confront the dwindling of their direct sales channels.
That company raised $10 million in a Series A round of its own — bringing the company’s total financing to $20 million. Joining previous investors Nyca Partners, Commerce Ventures, Contour Venture Partners and Connectivity Capital Partners was the strategic investor Allianz Life Ventures — the investment arm of the insurance giant Allianz.