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Insurtech funding reached $5.3 billion in the third quarter of 2021 and has surpassed $15 billion for the year, according to a report Wednesday from Forrester Research Inc.
The $5.3 billion was raised across 472 deals, and 12 rounds of funding were for $100 million or more, Forrester said.
Third-quarter 2020 saw only $1.87 billion in insurtech funding, according to Forrester data.
Approximately 70% of third-quarter 2021 insurtech funding went to U.S.-based insurtechs, $3.77 billion, followed by the U.K. at $330 million and India at $259 million.
Although the bulk of the funding has gone to what Forrester describes as “early-stage startups,” the two largest deals of the quarter were private investments that went to established companies: employee benefits platform Alight Solutions LLC at $1.6 billion, and to homeowners insurer Hippo Enterprises Inc. at $550 million.
Among investors during the quarter were Munich Re Ventures, part of the German reinsurer, and Japan’s Sompo Holdings Inc.
The report was bullish on further funding for the remainder of 2021.
“Into Q4, 2021, expect funding to remain strong as venture capitalists see the transformative appeal of insurtech innovators,” Forrester said in its report.
In a separate report Wednesday, S&P Global Market Intelligence, a division of S&P Global, said that some public insurtech companies may be subject to mergers and acquisitions due to collapsing share prices.
S&P cited as its example the purchase of Metromile Inc. by Lemonade Inc.
The ratings agency said that many insurtechs have seen their values plunge after going public and that of a dozen insurtech companies that completed an IPO or a special purpose acquisition company merger on a major U.S. exchange since the start of 2020, “only three were above water as of Nov. 8.”
Such stock price volatility could drive mergers and acquisitions activity in two ways. “Companies whose stocks have been pummeled might, like Metromile, look for a buyer. Two, the insurtech startups that are still private might decide to sell their companies rather than go public.”
Cyber managing general underwriter Corvus Insurance Holdings Inc. said Thursday it has acquired Cambridge, Maryland-based SeQure Underwriters LLC, an insurtech managing general agency.