Investment in the insurtech sector reached record highs in Q1 2019 yet there is lack of obvious value in the many of the newest insurtech offerings, according to a recent report.
The latest Quarterly Insurtech Briefing from insurance broker Willis Towers Watson showed that the highest number of transactions yet (85 with a total value of $1.42bn) were made by insurtech investors in the first three months of the year.
This made it the third consecutive quarter in which value exceeded $1bn although it was an 11% reduction in total value compared to the previous quarter
However despite no shortage of capital, the WTW report suggests that there is still a lack of clear value from many of these nascent insurtech offerings.
“One could argue that much of the InsurTech space is in fact akin to the emperor’s new clothes,” says Andrew Johnson, global head of Willis Re. “In other words, there are very few people feeling brave enough to say, ‘where is the change or the improvement?’”.
Johnson says that WTW recognises the importance of appropriate technology to the insurance marketplace as well as the potential for innovation, adding that “we are positive that some insurtechs are adding genuine value”.
But, addsJohnson, the ability to rationalise the sheer volume of hopeful companies and hype in this space “is becoming an increasingly difficult task”.
The fact that total value of Q1 deals dropped despite the number of deals rising does suggest perhaps a subtle change in the price investors are willing to pay to finance new insurtech offerings.