Insurtech funding reached an all-time high of $US2.55 billion ($3.31 billion) across 146 deals in the first quarter, up 180% from a year ago and 22% from the fourth quarter of 2020.

That was more investment activity than achieved annually in either 2016 or 2017, the latest Willis Towers Watson InsurTech Briefing says.

Property & Casualty-focused InsurTechs represented more than two thirds of deals, with Life & Health making up the balance.

“Over the past few years, we have seen a ramping up of investment into InsurTech across the globe,” WTW says. “The past twelve months have provided a fantastic opportunity to make the most of a turning tide: the era of acceptance and openness.”

The first quarter saw a record number of “mega-rounds” of more than $US100 million ($129.6 million), which was an all-time record, with eight companies driving roughly 44% of this quarter's funding.

The top three largest rounds from this quarter went to Next Insurance, a full-stack SMB insurer, Coalition, a commercial cyber insurance and security provide, and Zego, a usage-based motor insurer for businesses.

Sidecar Health, Pie Insurance, Clarify Health, Corvus Insurance and TypTap rounded out the mega rounds.

Next Insurance nearly doubled its valuation to $US4 billion ($5.18 billion) and Coalition and Zego both achieved unicorn status.

“While historically mega-rounds are typical of late-stage companies, this quarter, the majority of companies were raising Series C growth rounds, potentially an indication of expanding funding requirements earlier on in the cycle, of froth in the markets, or both,” WTW says.

The briefing says investment is likely to continue to grow, partly because the term insurtech is becoming more widely applied.

“It is quite possible that we will see year-on-year investment into InsurTech continue to grow as the use of the term shrouds what is actually going on – a situation that might have previously been classed as a traditional investment but is now captured by an increasingly diluted term,” it says.

“Firms self-identifying as InsurTechs are growing by the day, therefore any capital raised by such things will be captured as investment into InsurTech.”

The report says “widening goalposts are redefining what we used to mean” by insurtech and investment growth could “theoretically continue in perpetuity until such times that the term InsurTech becomes completely irrelevant because it will go without saying that a business or idea is fuelled by technology”.