Fintech is the word used to name the integration of technology into offerings by financial services companies. 2021 is a great year for the fintech startups fundraising. As investments in Fintechs are breaking records, the insurance sector is soaring.
InsurTech has become a powerful force of change in the insurance industry, and the world’s interest for startups in this industry is growing. A few examples: Online insurance provider Next Insurance Inc. raised $250 million, cyber-focused Coalition Inc. raised $175 million, and Berlin-based digital insurance company Wefox raised $650 million.
Let’s see some numbers!
According to TechCrunch, there have never been more $100 million fintechs rounds than right now.
Covid-19 had some impact as we saw in 2020, with great developments of digital payments and a big appetite among financial institutions for the latest technology.
And this momentum built in 2020 is still alive this year with some fundraising records about to be broken.
Compared to the banking and financial services sector, the insurance industry has been slow to integrate new technology. Startups in the insurtech industry have a massive addressable market. The sky is the limit for insurtechs with better mapped product-market-fit and a clear go-to-market strategies.
As the fundraising in the fintech world is growing, the specific sector of Insurtech is very interesting to track as we can see that “Insurtech is hot on both sides of the Atlantic”.
Insurtech proposes to tackle some problems of the traditional insurance industry:
- by simplifying the insurance process for the insured with digitized policies,
- by rebuilding trust and bringing transparency,
- by digitizing claims and payments
All of which are more reasons why the sector is fundraising unprecedent amount of capitals right now.
North America dominated this market in 2020 with 37% as the Americans need more insurance than any developed countries in the world, especially in the health industry.
North America is seeing an increased adoption of tech-enabled solutions, which increase the spending of customers in insurance-related products. The significant presence of technology providers in the North American region and the increasing demand for simple and end-to-end digital insurance products is expected to fuel this growth.
Halfway through 2021, Europe has already broken its record for annual investment into fintechs. European fintechs have already raised €10.4bn, outperforming the precedent record of €9.3bn raised in 2019.
2020 was a challenging year because of the global crisis, but now the sector seems to have bounced back. 2021 looks like a gold mine for European Fintechs.
Several reports are already showing that Europe has a major role to play in the insurtech sector, a massive $6 trillion market.
The European continent is home to more than 700 million people, compared to 350 million in the US. The European market is, in terms of potential size, very big. The big markets are Germany, the UK, Italy and France, and are therefore a preferred base for many InsurTechs.
Thanks and stay safe.
-Team OTONOMI
OTONOMI is a parametric insurance solution for carriers. We are transforming the air cargo insurance process into a fast, transparent, and cost-efficient experience for both the policyholders and insurers. Powered by our proprietary technologies in data-activated triggers, smart contracts, and integrated digital wallets, we reduce claim resolution times from 45 days to 45 minutes, lowering admin costs by 90%.