The insurance industry is  undergoing major transformations, yet insurtechs have been “cast away from the spotlight” and are not receiving their due investment, new research from Italian insurer Generali and Spanish venture capitalist Mundi Ventures and insurer Mapfre says. 

Insurtech represents a “massive $7 trillion opportunity,” the State of Global Insurtech report says -- larger than the mobility market which has recently received five times as much funding, and more than half the size of other fintech which attracts 10 times as much funding.  

The insurtech sector has been on a “rollercoaster” for two years, according to the report authors, after venture capitalist attention in 2020-21 switched to a “disillusionment phase” due to the poor performance of some notable players, and a broader market downturn. 

In the first half, insurtech funding was $US2.4 billion ($3.6 billion), data from Dealroom.com shows – a return to 2018-19 levels and a fall of 45% from the same period a year earlier. Late-stage insurtech investment was down more than 60% from the peak, and early-stage investment down nearly 30%. 

Health, enterprise software and fintech excluding insurtech all attracted more than $US20 billion ($30 billion) in venture capital in the first half, though funding was down in all sectors from a year earlier. Energy, transportation, foodtech, semiconductors and robotics all recorded funding falls of half or more. 

“Insurtech is still a massively underfunded area,” the report says. “We believe in its medium and long-term success when moving away from growth-at-all cost and focusing on operational efficiency and profitability, guided by deep insurance expertise and tech.” 

“The so-called “death of Insurtech 1.0” has cast the whole insurtech space away from the spotlight, but … insurance is still a strongly underfunded market, especially in areas such as life insurance.” 

The funding environment has toughened, the report says, though early-stage funding and some leading private players show opportunities still exist for quality startups. 

Operational efficiency is “now a must” for insurtechs and insurers, and startups are enabling operational efficiency through the whole value chain, it says. While public valuations of listed insurtechs has plummeted, several leading private insurtechs have been able to confirm or increase their valuations in recent months, it says. 

The report says the share of funding outside of North America, Europe and China has reached 31% this year, mostly led by Asia.  

See the report here.