LONDON – World funding in insurance coverage know-how companies totalled $2.41 billion within the second quarter, down 50% from a yr earlier, as buyers grew nervous about frothy valuations, dealer Gallagher Re mentioned in a report on Thursday.
Insurtech companies make up round 10% of the fintech sector and have seen a number of profitable fundraisings lately. German digital insurance coverage startup Wefox final month mentioned it had raised $400 million from buyers, valuing the enterprise at $4.5 billion..
However some companies have discovered it robust to compete with established gamers and have suffered from the broad sell-off in tech shares.
U.S. normal insurer Lemonade’s shares have greater than halved because it went public two years in the past.
One subject is that blockchain – a database shared throughout computer systems through which information are troublesome to vary – feted a number of years in the past as a method for insurers to chop prices and turn into extra environment friendly, had not lived as much as its expectations.
“Blockchain is a binary resolution – it’s great for issues like accounting,” mentioned Andrew Johnston, international head of insurtech at Gallagher Re, including that in distinction:
“Insurance coverage is very negotiated, extremely versatile and ongoing. Blockchain additionally occurs to be extraordinarily costly.”
The drop in valuations may result in insurtech M&A offers or disposals which have been “unlikely” six months in the past, Johnston mentioned.
Nevertheless, insurtech funding picked up barely from the primary quarter, gaining 8%, the report confirmed.
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