Being at the heart of the European InsurTech scene — investing in seed InsurTech startups, scouting startups through its automated sourcing tool, and being involved in many local InsurTech scenes across Europe — astorya.vc is happy to share a detailed overview of what happened in that market in 2019.
Through this report, you’ll learn more about how much was invested, how many deals were done, who raised the biggest amount, how money was split across countries, which part of the insurance value chain was mainly targeted, etc.
Let’s strip the €800m down to better understand the trends.
🦊wefox Group (wefox & ONE) blew the stats taking >25% of the money
🇩🇪3 German startups raised 50% of the total amount: FRIDAY Versicherung, ottonova
🤑80% of the money invested in only 12 companies: Shift Technology, Zego, Alan, Cytora, Qare.fr, Luko, Getsafe, Cuvva, DreamQuark 🤜🤛
Full-stack insurer models are becoming more and more popular. The value of the business model here goes beyond commissions on distribution. One can master the entire value chain (from sales to the most fragile touchpoint in the customer journey — claims).
💰 These startups raise significant amounts of mixed equity and debt funding to be able to carry risks on their balance sheets.
💫 They are becoming more popular as a big barrier to entry - a perception that receiving the insurance license is impossible - has been erased by successful precedents.
Unfortunately, we still see a big majority of deals being done in the distribution part of the value chain as MGAs. Unfortunately because:
📱 Majority of such startups are trying to just build better landing pages and ads retargeting to sell in the b2c model (MGA). Little or no technology (e.g. data science for risk underwriting) raises a question if these are tech startups or just specialized marketing agencies.
⚙️ This model has proven to be (i) difficult (insurance is not like $1 FMCG straight from China, people don’t care about buying it online) and therefore expensive (high CAC due to low interest and extensive competition).
💰 From an investors standpoint, this model has the main disadvantage — high online marketing spending:
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Also, unfortunately, there are very few startups which are attacking other parts of the value chain:
🌋 new products: new customer segments and risks are waiting to be served: expats, SMEs, freelancers and gig workers (group which combines professional and personal risks), e-scooters, shared economy, cyber risks, climate-related risks, fake media and many more.
🛰 new data, risk underwriting & pricing: open data, satellite images, social media graphs, bank transactions, food delivery services, IoT, etc. which could open a completely new chapter of personalisation of policies and pricing, better prediction accuracy and prevention capacity.
🎯 operational excellence (fraud detection, claim resolution, policy administration, etc.): despite having a few success stories (Shift Technology) and runners up (Dreamquark, Zelros) a huge need of combined tech and insurance knowledge seems to be a roadblock here.
🇩🇪3 German startups raised 50% of the total amount: wefox Group, FRIDAY, ottonova
🇩🇪German insurtechs are the most mature (despite similar market size in France 🇫🇷& the UK 🇬🇧, market sizes:DE — €200B in insurance premiums, FR — €220B, UK — €240B)
🇪🇺very few, because just 55 insurtech deals in Europe in total, which is just ~10% of all 500+ insurtech startups in Europe
🍼This is logical, but it also shows how big opportunity there is to develop other European markets, like: Italy, Spain, Poland, Ukraine, Romania (all >20m population). Let’s hope for a wave of insurtechs from there countries and hope they’ll learn from the mistakes of the more mature Big3.
