(this article was initially published on tech.eu, here)
After a very active year last year — with around €2.5B invested in insurtech Europe (read more) — and a market correction for public tech companies, it’s time to review how things went in the European insurtech scene during the first half of this year.
Depending on how to measure the “activity” of a startup ecosystem, there will be a different answer: with 60% less money raised during six months — compared to the same period last year — that is a huge drop! But there were 10% more deals inked during that period. Hence, the ecosystem is still alive, which makes sense as there is still a lot of room for innovation in the insurance industry.
To help you get a comprehensive view of the European insurtech scene, we are happy to provide you with further details on deals announced in H1 2022. Based on astorya.io’s market intelligence tool, every funding round was spotted and analyzed, to build this report. You will find usual KPIs by size and countries, and business-oriented knowledge alongside the insurance value chain.
During the first half of this year, over €700m were invested in insurtech startups across Europe. If this is very close to the €800m raised during 2019 and well over the €600m invested in 2020, it’s far from the €1.8B invested in H1 last year (remembering Wefox’s round back then, accounted for €532m on its own).
Beyond the drop in terms of euros invested, the activity remained high with 57 deals announced over the last six months. Do the math and you’ll get that, on average, deals were smaller than last year: €12m this year compared to €34m last year during the same period last year !
To go more into details, the threshold was at 10m€: there were more up-to-€10m rounds inked in the first half of this year than in H1 last year, but there were less rounds over €10m. That’s where the gap in terms of euros invested is coming from, obviously.
In terms of mega rounds (over €100m) — which piled last year and were under careful watch in the first half of this year — two of them were announced and both occurred in France: Descartes Underwriting announced a €105m round at the very beginning of this year, while Alan disclosed its €183m round in May. Together with Xempus’ €63m fundraising round, these three biggest rounds accounted for half of all the money invested in insurtech Europe! Adding 8 other rounds over €15m and all together they accounted for 75% of money raised. Yes, money was very concentrated once again.
In France, for instance, the top 3 deals announced — Alan, full-stack health insurtech ; Descartes Underwriting, parametric weather insurtech ; and Seyna, full-stack multi-line insurtech — accounted for 83% of money invested. It was even more concentrated in Germany where one deal — Xempus, life insurtech — accounted for 84% of total money raised! On the other hand, the UK ecosystem was more balanced with almost as many InsurTech deals below €5m as in the €10m-€15m range, while no mega-round was announced. Beyond these three biggest startup scenes, the average round was a bit above €4m in “the rest of Europe”.
The level of activity is different among ecosystems. If the UK led the wave once again, with 28% of deals announced over that period of time, France was busy as well with 26% of rounds inked there. On the other hand Germany was quiet with only 12% of fundraising done in that country. Most of all, beyond these three biggest startup scenes, the “rest of Europe” was booming with 33% deals announced there ! That’s another part of the explanation around the difference of activity compared to last year: the biggest ecosystems were a bit less active — they are usually home to the biggest rounds — but local ecosystems remain very active (e.g. 4 deals announced in Spain compared to 7 in 2021 full year), or even surged (for instance, the Italian InsurTech scene has been very active so far this year, with already 5 deals announced there, compared to only 2 rounds announced last year !).
The value chain was once again well covered with deals announced in each part of it: from product and underwriting, to distribution and claim. Even full-stack players (owning the insurance license) raised money. With no surprise the ‘distribution’ part was the most active with 55% deals announced around that section. But interestingly, if we look into more details there, players are getting more diverse. It makes sense: the more the ecosystem is maturing, the more specific solutions tend to be. Hence, after a first wave of startups doing online distribution (B2C players like ManyPets — formerly known as ‘BoughtByMany’ — in the UK, offering pet insurance ; Getsafe in Germany, selling several insurance products like home, bike or tech devices ; or Luko in France, selling home insurance, that acquired Coya — a German full-stack insurtech startup — earlier this year, read more), new players developed tools for brokers (+Simple in France, offering digital tools for SME brokers, is a good example and had a good time earlier this year with a Private Equity deal to keep scaling across Europe, read more). More recently the “Embedded Insurance” trend gained momentum as more insurtech startups are developing technology to enable any player add insurance to its customer journey.
Beyond, the ‘product’ part was very active with 29% rounds addressing that part of the value chain. Such startups are usually addressing “new risks” (i.e. limited — if not no — historical data, growing damages, and risk coverage not yet mainstream, e.g. cyber or weather insurance) or commoditized ones in a new maner (e.g. telematics for car insurance).
In terms of business lines, it’s tempting to consider “InsurTech is only about P&C” as one often hears among incumbents. The reality from the market is a bit different: rounds announced in the first half of this year cover every business line (from P&C, to Health and Life around personal lines, to commercial lines and enterprise software). If P&C was the most active line, with 36% rounds announced in that space, 23% of deals were around commercial lines and the same level of activity happened in enterprise software. That shows a real diversity in the European InsurTech scene, though it differs among local ecosystems: no deal announced in the ‘Life’ insurance space in France, no ‘Health’ insurtech deal in Germany and the UK.
Will the activity — in terms of number of insurtech rounds inked — stay afloat or will the correction at later stage go down to early-stage startups? Everyone wonders how things will go in the near future. Mega-rounds might also come back: for instance Wefox is said to be raising a huge round (see here).
In terms of opportunities, the granularity we start seeing around ‘distribution’, the surge in insurtech startups targeting the ‘product’ part of the value chain, or the new wave of SME insurtech, are a proxy of the room still available for innovation in insurance. And seeing the ‘claim’ part of the value chain lagging behind, also leaves room for new initiatives. At the geographical level, there are also opportunities to tackle: Germany for instance lagged behind in H1 2022, especially considering how active it is more broadly as a startup ecosystem. More should happen there!
In addition, and as experienced at DIA Amsterdam at the end of June — where startups pitched on stage alongside one of their customers, to highlight not only their tech positioning, but focus on the value proposition and how insurers could benefit from insurtech -, there might be a rush towards clear & real value propositions. That sounds obvious, but beyond the correction in terms of investment, that’s a trend spotted among corporates: still looking for technologies (see BNP or Credit Agricole in France with technology at the heart of their recent strategic plan) but with a clear use-cases in mind, and a focus on ROI.
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