Insurer investment into start-ups soars with insurtech VC groups
The number of insurers and reinsurers investing in private technology start-ups rose by 49% Y-o-Y in 2016, with 100 deals completed, representing growth of 257% compared with 2014's figures, according to data from CB Insights. It revealed that in 2015-16, 65% of "strategic tech investment by (re)insurers" went to the US, compared to 84% between 2013-14, thanks to emerging players in the European and Chinese markets. The report also cited connected device companies, and start-ups in the distribution and cybersecurity sectors as the most attractive to investors.
Thematic areas that attracted strategic investment in 2016 included cybersecurity, property management software, IoT, and digital insurance distribution.

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In 2012, insurers or reinsurers completed just one strategic investment to a private tech company. In 2016, they completed 100, according to CB Insights data.

The growth in strategic private tech investment by (re)insurers comes as the number of insurance-related corporate venture capital groups continues to grow. This month, Northwestern Mutual announced the creation of the $50M new Northwestern Mutual Future Ventures Fund. In October, CUNA Mutual’s CMFG Ventures formally launched, while Liberty Mutual and Insurance Australia Group also launched formal venture capital initiatives in 2016.

On a year-over-year basis, private tech investments involving (re)insurer participation rose 49% in 2016 and 257% from 2014’s tally.

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Strategic tech investment by (re)insurers grows more geographically diverse

As the number of investments into tech companies by (re)insurers or their strategic venture arms has risen, so to has the number of countries those investments have spread to.

Between 2013 and 2014, 84% of private tech investments by (re)insurers went to US-based companies. Between 2015 and 2016, 65% of strategic tech investment by (re)insurers went to the US as Germany, France, the UK and China also attracted deals. More recently, Munich Re/HSB Ventures invested in UK-based Bought By Many, a members-only service for offbeat insurance, while XL Catlin’s XL Innovate invested in Switzerland-based Stonestep, providing microinsurance-as-a-service.

Focus areas

A few thematic areas stand out where (re)insurers made startup investments in 2016, including:

Digital distribution: A number of (re)insurers have financially invested either directly or through their corporate venture arm in an insurance tech startup distributing insurance including brokerages, managing general agents and licensed carriers. 2016 strategic investments in digital distribution include Oscar (Ping An Ventures), Alan (CNP Assurances), Lemonade (XL Innovate), Metromile (Intact, China Pacific), Slice Labs (Munich Re/HSB Ventures, XL Innovate), Embroker (XL Innovate) and others.

Connected devices: (Re)insurers continued to invest in connected device companies in 2016 including Relayr (Munich Re/HSB Ventures) and Helium Systems (Munich Re/HSB Ventures) in an industrial context and Notion (XL Innovate, Munich Re/HSB Ventures) and August Home (Liberty Mutual Strategic Ventures) in the smart home.

Cybersecurity: Cybersecurity and risk was also a busy area for strategic investment by (re)insurers in 2016. Among the startups that (re)insurers invested in include UpGuard (IAG Ventures), Riskified (Phoenix), Skycure (New York Life Ventures) as well as three separate investments by MassMutual Ventures in CyberGRX, RiskIQ, and Pwnie Express.

Property/rental management: We saw a few investments in property and rental management software for vacation rentals, commercial property and residential renters. These include Vacasa (Assurant), Building Engines (MassMutual Ventures) and Cozy (American Family Ventures).

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