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Insurtech Raised Record $19.8bn in 2021, says Forrester

Forrester Reasearch has released fiscal investment details showing global insurtech funding hit almost $20bn last year

According to a recent analysis by Forresters, global funding for insurtech startups has reached an all-time high.

Digital insurers generated the most capital among insurtech companies, according to Forrester Reasearch, driving the industry to collect an amazing $19.8 billion in capital in 2021. According to Forrester Research’s Insurtech Funding Roundup, Q4 2021, the figure marks a 176 percent rise over the previous year. The last quarter of the year was the most profitable in terms of investor interest, resulting in significantly larger insurtech investment round sizes, making the US sector the most favourable market globally.

Digital insurers winning the US funding race

According to the study’s findings, digital insurers received about 55% of insurtech funding in 2021. The most successful concentrated on health and travel, which attracted the highest investment interest, producing $1.4 billion in Q4 2021. This sector, which included $1.2 billion for Devoted Health, came in second among insurtech funding categories, only behind infrastructure and back-end firms, which garnered $1.5 billion.

According to Forrester Research, the evidence presented in the research implies that insurtech financing will continue to flow to digital insurers since their streamlined processes and quick product delivery make it easier for clients to buy and utilise insurance.

2021 an overall win for insurtech investors

The study proves the insurtech market in general is in a healthy and exponential growth stage. Early-stage startups collected $4.3bn in funding in Q4 2021 and were the third-strongest quarter of the year. Evidence suggests early-stage startups are a critical element of the market because they disrupt the marketplace and present innovations that can be adopted on a widespread scale. Evidence suggests this is a trend that will endure throughout the next decade as insurtech gains ground on the wider insurance industry. Experts also believe investors will continue to be attracted to early-stage startups because the companies help drive operational efficiency, create new products and win new customers.

Insurtech funding coming from the wider insurance industry

According to the findings of a Forrester Research study, 50 insurtech firms received investment in Q4 2021, with nine of them participating in megarounds of $100 million or more. The median amount of capital per company was $26 million, up from $10 million in the first quarter of 2021. Startups in North America received 75% of all investment.

Life insurers are also prioritising the digital experience, probably because life insurance policies in the United States are notoriously pricey and targeted at a rich audience, leaving a large portion of the population untouched. Insurers are also investing in technology to improve business procedures in P&C, while reinsurers are developing digital platforms to diversify their business.

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