Global investment in insurtechs fell 54% in the first quarter as reinsurer participation dropped, with the coronavirus pandemic being seen as the “likely culprit” behind fewer deals and a significantly lower overall amount raised.

While the latest Quarterly InsurTech Briefing from Willis Towers Watson says the deal count, at a record 96, was up 28% over the final three months of 2019, only $US912 million ($1.43 billion) was raised in the first quarter.

This was less than half the record investment seen in the December quarter. That reflected only one ‘mega-deal’ above $US100 million ($156.24 million)—a capital-raising by US comparison site PolicyGenius – and no “unicorn” rounds above a billion dollars.

Andrew Johnston, global head of InsurTech at Willis Re, says COVID-19 is the “likely culprit” for the drop in industry capital as insurers and reinsurers focus their attention on “more pressing issues”.

“This has been a particularly interesting quarter for global InsurTech. It is clear that COVID-19 has had a material impact on later-stage investments, and (re)insurers are holding back,” Mr Johnston said.

The 2020 year began on the same trajectory as the previous year, with almost the same amount of money raised in the first three days of January as was then subsequently raised in the quarter’s final three weeks, when the pandemic took hold globally.

“We are still seeing a huge amount of activity in early-stage funding rounds, across a very large number of deals,” the report says, adding that reinsurer participation accelerates in later funding stages.