Asia-based insurtechs raised $7.4B in funding between 2018 and 2022, fueling a group of startups across the insurance landscape — especially in personal lines coverage and distribution channels.

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AVP has $1.2B of assets under management and invests in data-driven startups that can impact healthcare, customer experience, and underwriting performance. These areas represent opportunities that are relevant to the entire insurance industry.

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The company has taken a two-pronged approach: partnering with established tech companies to improve current operations and products while investing in startups to prepare for autonomous vehicles and other longer-term innovations.

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However, investment activity has continued to slow. Q4’22 funding only reached $1B​ — the lowest quarterly total since Q2’18 — and deals were down 28% QoQ at just 106.

Below, check out a handful of highlights from our 96-page, data-driven State of Insurtech 2022 Report. For deeper insights, all the trends to watch, and a ton of private market data, download the full report.

Other 2022 highlights across insurtech include:

• M&A activity surged to reach a new high amid falling insurtech valuations. European insurtechs led the way, representing 50% of all M&A exits.
• $100M+ mega-rounds — which were a significant driver of 2021 insurtech funding — fell sharply in 2022.
• Average and median deal sizes were down 42% and 31%, respectively, compared to 2021’s totals.
• Early-stage deals made up 65% of all insurtech deals, the highest share since 2018.
• In Q4’22, Europe (28%) reclaimed its second-place spot for regional insurtech deal share from Asia (18%). The US led with 46% of all deals.

Download the full State of Insurtech 2022 Report to dig into all these trends and more.

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Claims data enhancement platforms bring together third-party alternative datasets, such as social media activity logs, public records, and demographic information. Insurers can tap into these data sources to augment their own internal and customer-reported datasets — with the goal of improving and expediting claims decisions.

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Optical character recognition (OCR) systems extract and convert text (including handwritten text) from documents or images into structured, digitized text. This technology enables P&C insurers to reduce costs and make data processing more efficient by limiting manual data digitization.

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Claims management solutions act as the main systems of record for claims personnel to view, assess, and make decisions regarding claims cases. While these systems can help automate the claims process, they can also augment claims adjuster decision-making processes by providing necessary information and suggestions for the next best actions.

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Claim assessment analytics solutions ingest all relevant data associated with a claim case to provide suggested next steps. For example, they can help determine whether a case is simple enough for straight-through processing or if a manual review is necessary.

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Climate change is causing more frequent and more intense catastrophic weather events. Last month’s Hurricane Ian could be the largest insured loss event in history. With climate-related losses expected to continue climbing, insurers will need more granular, real-time climate data and enhanced analytics capabilities to accurately price policies and manage claims.

Recent developments in climate tech can help the insurance industry understand and plan for changing climate and weather-related risks. Insurers are already leveraging these solutions to improve their current operations and spark new innovation, including developing climate-focused parametric insurance products.

Using CB Insights data, we surface 3 insurtech trends to watch this quarter, and highlight what’s next across:

• Long term risk evaluation
• Geospatial analytics goes mainstream
• New solutions emerge using weather analytics

Long-term risk evaluation

Tech to watch: Catastrophe modeling 

Why we’re paying attention: With catastrophe losses rising due to the increased severity and frequency of events, insurers are turning to tech to improve how they understand future risks. Insurtechs and incumbent catastrophe modeling companies have made strides to improve their products through partnerships and new product features specifically with climate change in mind. 

For example, EigenRisk recently launched an updated catastrophe risk platform that combines traditional short-term (<1 year) catastrophe models with climate change model scenarios that span 10-30 year time frames.

Meanwhile, Reask focuses on wind and atmospheric risk modeling. The startup raised its initial seed round in January. Reask also partnered with Fathom, a flood risk modeling company. The companies plan to sell each other’s products initially and bring new, combined wind and flood catastrophe models and risk maps to market in the future. 

Long-standing catastrophe modeling incumbent companies are also working hard to improve their products to meet climate change risks. For example, RMS recently announced that Axa will use its Hwind product — which provides real-time cyclone data — as a key trigger metric for its US parametric insurance policies.

Axa’s parametric insurance product will automatically pay out claims when a defined metric (e.g., wind speed) is met, simplifying the claims process.

Why it matters: Climate change is already causing more severe and frequent catastrophes — and this trend will continue. Estimates already show Hurricane Ian is the largest insured loss event of all time at $75B, and some insurers are expected to go into insolvency as a result. 

Without advanced catastrophe modeling capabilities to price policies and balance portfolio risks, insurers are at risk of heavy losses and even insolvency as climate change worsens. 

What’s next: Insurers and insurtech companies will continue to update their catastrophe modeling capabilities, focusing on access to real-time granular data and longer-term forecasting capabilities using AI technology. Further, expect to see increased product innovation, such as parametric insurance, as the industry looks for creative ways to insure catastrophic events in a profitable manner. 

Underwriting and claims automation

Tech to watch: Geospatial analytics

Why we’re paying attention: Overall funding for geospatial analytics companies in 2022 is lagging 2021 levels; however, there have still been a handful of notable fundraisings, including Zesty.ai’s $33M Series B in July and ICEYE’s $136M Series D in February. 

Meanwhile, other startups in this space are targeting partnerships to improve their offerings. For example Arturo, partnered with aerial imagery data company Vexcel Imaging to provide clients with better geospatial imaging, including ortho imagery, oblique imagery, digital surface models (DSMs), and “Gray Sky” imagery (imagery taken after catastrophic events).

Insurers are also increasingly buying these solutions as the tech matures. In Q3 alone, Betterview signed Guideone Insurance and Southern Trust as new clients for its geospatial analytics platform for property intelligence and risk management.  

Why it matters: Insurers can use geospatial analytics to quickly and accurately underwrite policies and virtually assess claims for property insurance without needing in-person inspections. As weather events become more frequent and severe, insurers will need to be able to efficiently scale their property inspection operations. 

What’s next: Underwriting and claims teams have prioritized geospatial analytics in recent years. Expect to see more insurers adopt this technology in the near future.

Further, as the tech matures — through data partnerships as well as new product developments — expect insurers to scale geospatial analytics to more of their portfolio. 

Insurance product innovation

Tech to watch: Hyperlocal weather analytics

Why we’re paying attention: Though funding to hyperlocal weather analytics companies in 2022 has lagged behind 2021 levels, a few early-stage companies raised funding in Q3’22, highlighting new innovation occurring in the space.  

For example, Puerto Rico-based Raincoat is building out parametric insurance solutions that will use weather data as claims triggers. The company has active projects in Puerto Rico, Jamaica, Mexico, and Colombia. It raised a $4.5M Seed VC round led by Anthemis in August.

Similarly, Australia-based Hillridge Technology, which raised a $1.57M Seed VC round in September, offers parametric insurance policies based on weather triggers for farmers. 

While weather-associated risks are top of mind for underwriters and claims teams, they are also a concern for insurers’ investment teams. To address this, Aon partnered with Jupiter Intelligence to use its weather analytics platform and data to offer more comprehensive risk management services to Aon’s clients. The services target their climate-based insurance and investment needs.

Why it matters: As climate change progresses, new insurance solutions will be needed. Weather data has always been crucial to how the insurance industry underwrites and handles claims, but emerging technologies and climate risk concerns are driving innovation in products and risk management practices. 

To price accurately, respond to claims efficiently, and maintain a safe investment portfolio, insurers will need to tap into new weather data and to be creative in their risk management practices and product development.

What’s next: Expect to see more parametric insurance offerings from both startups and incumbents. While initial pilots will likely remain in specific geographies or product types, as these pilots mature and succeed, expect to see parametric insurance offerings become more mainstream.

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Funding was primarily driven by P&C insurtech startups, which grabbed $1.8B across 89 deals — representing over 75% of all insurtech funding in Q3’22.

Below, check out a handful of highlights from our 82-page, data-driven State of Insurtech Q3’22 Report. For deeper insights, all the record figures, and a ton of private market data, download the full report.

Other Q3’22 highlights across insurtech include:

• Mega-round funding came in at $1.5B, representing over 60% of all insurtech funding.
• For the first time since Q2’18, there were no new insurtech unicorn births.
• In 2022 so far, average and median deal sizes are down 35% and 29%, respectively, compared to FY 2021’s totals​.
• Asia (25%) surpassed Europe (21%) in deal share for the first time since Q4’21.
• After 4 quarters of decline, P&C insurtech saw funding grow 20% QoQ.
• Anthemis was the most active insurtech investor, backing 4 companies in Q3’22. Eos Venture Partners, Greycroft, Lerer Hippeau, and SiriusPoint were tied for second, each with 3 companies backed.

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The auto insurance industry has already seen significant advances in the last decade in terms of its digital sophistication. But there is still a long way to go.

The future of auto insurance will be built on key technologies such as:

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In this report, we dive into who these companies are selling to, how they price and implement their solutions, and their plans for future fundraising — based on data collected via CB Insights Analyst Briefings. 

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In addition to its flagship reinsurance unit, which comprises subsidiaries like specialty insurer Hartford Steam Boiler (HSB), the company has a primary insurance unit (ERGO), a standalone asset management arm, and a corporate venture capital arm (Munich Re Ventures).

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Six of the top 10 deals in the space in Q2’22 went to insurance providers, including commercial broker Newfront Insurance, health insurer Alan, and auto insurance marketplace Caribou. Despite their different business structures, these companies share a focus on creating better customer experiences for insurance buyers.

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In fact, 62% of all property and casualty insurance products in the US are still purchased through an independent broker or agent, according to Independent Insurance Agents & Brokers of America. However, insurtechs are still upping the standards for customer service, fast onboarding, and comparative shopping. Agents and brokers now even find themselves leaning on insurtech solutions to remain competitive in the market, particularly as agencies that use digital tools see higher customer satisfaction levels, according to a recent JD Power survey.

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Hyperlocal weather analytics companies source historical and real-time weather data to provide insurers with up-to-date weather information and forecasts for underwriting claims and other operational needs.

Real-time hyperlocal weather analytics can help insurers understand how weather changes will affect their customers and insured assets.

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Tech solutions in this category handle pricing & rating algorithms and models necessary for the underwriting process. These systems establish rating and pricing rules that can ultimately calculate the premium of an individual submission that the underwriter can then use to quote and offer to the applicant.

Typically, platforms will have a variety of pre-built pricing & rating models that insurers can use immediately, as well as flexible configuration tools to let insurers customize the models to fit their own methodologies and risk appetites.

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Predictive analytics combines statistical modeling and artificial intelligence methods to complement the actuarial approach, offering a more forward-looking view to underwriting.

This technology analyzes internal and external data sources to identify patterns and connections that are not discoverable by human cognition alone. These insights are used to establish the likelihood of different outcomes.

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Claims evaluation & settlement solutions are helping insurers gain insight into their claims, ultimately enabling them to automatically settle simple claims and shift resources toward more complicated tasks.

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Geospatial analytics platforms combine demographic and geographic data to increase the precision of risk assessment, reduce the cost of data collection by minimizing the requirement for on-site inspections, and provide novel insights. Use cases include automated property damage assessments and more granular underwriting for wildfire risk.

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IoT technology combines hardware, software, analytics, and cloud platforms to increase visibility into policyholders’ business operations. This technology can help P&C insurers boost predictive power, improve their underwriting decisions, increase the precision of their pricing, and reduce risk.

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Startups in the region are emerging to deliver significant tech-driven changes across the insurance industry, and they are catching the eyes of investors. As of Q2’22, Europe-based insurtechs had collectively raised $7.1B since 2018 — more than any other major region outside of the United States.

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