Investments in Insurtechs Rose in Q4 2018; Cyber Becomes a Focus

February 26, 2019

Sixty-three insurtech deals with a total value of $1.59 billion were announced worldwide in the fourth quarter of 2018. The number of deals was up 24 percent while the value jumped 155 percent over Q4 2017.

The total, including all-stage investments in property/casualty and life & health ventures, is the second-highest ever behind the second quarter of 2015, according to the new Quarterly Insurtech Briefing from Willis Towers Watson.

After rising for several years, the number of strategic insurtech investments by insurers and reinsurer declined by six percent from its peak in the second quarter of 2018, but funding increased significantly. Eleven insurance-sector investors placed $218 million into insurtechs in Q4, 2018, up 230 percent from the previous quarter.

Currently the global industry maintains 31 strategic partnerships with technology companies, the highest number recorded.

The latest Willis briefing nots the rise in particular of new insurtech tools to help manage cyber risk including Guidewire’s Cyence Risk Analytics, which models the economic impacts of cyber; Corax, which builds analytics tools to support the design and pricing of new cyber insurance products; Paladin Cyber, which creates cyber-risk detection and protection tools; Zeguro, which builds tools to remove cyber threats; and Refirm Labs, which devises methods to vet and validate hardware security.

“Cyber is a multifaceted, ever-evolving phenomenon. The appropriate response to this is to task our industry with an equally multifaceted approach,” said Dr Andrew Johnston, global head of Insurtech at Willis Re. “Rather than trying to specialise and excel in each tenet required, insurtechs offer our industry a huge opportunity through strategic commercial partnering to allow incumbent insurance firms the ability to become part of a broader, more resilient jigsaw puzzle.”

According to Mark Synnott, global head of Cyber at Willis Re, there’s a “healthy ecosystem” of insurtechs, insurers, reinsurers and brokers working on cyber risk. “More work needs to be done to address silent cyber, since potential accumulation exposure is enormous, but it is under way,” he said, citing for example, a module in Willis’ own PRISM-Re cyber model that assesses exposure to silent cyber and several insurtechs that have developed software that deploys policy-analysis algorithms that help insurers expose and quantify silent cyber coverage. “As the cyber threat grows, such tools will become increasingly valuable and commonplace,” he said.

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