UK insurtech defies global trend as investment soars

UK insurtech saw over US$1bn of investment activity through 2018, up from US$792m in 2017, despite stalling global investment levels, which declined year-on-year by almost half, standing at US$5.7bn for 2018.

This is according to business adviser KPMG, whose ‘Pulse of Fintech’ report was published today.

Commenting on the findings of the report, head of insurance at KPMG UK, Simon Ranger says claims management and the unbundling of services and processes were magnets for investment through 2018, a trend he expects to continue.

“Exciting technologies like AI and machine learning are going to redefine insurance, but it will be almost impossible to see their full potential until firms have dealt with the basics – their data and legacy systems – and that for most, is still a work in progress,” Ranger explained.

“Clearly, the UK has a thriving insurtech sector. We are seeing the market mature as fewer, but bigger, deals take place. In line with overall fintech investment activity, insurtech was fuelled by the first half of the year with investment nosediving in H2. Between July and December 2018, just US$63m of investment activity took place, versus US$406m during the same period in 2017. Whether this is a trend that will continue remains to be seen.”

Commenting on the global picture, head of insurtech at KPMG Global, Will Pritchett said that whilst the year saw a sharp drop in investment levels, a total US$6bn is still easily the third-highest ever annual total.

“Looking to the year ahead, Asia is poised to see substantial growth in insurtech investment, in part driven by US and Europe-based traditional insurers looking to use Asia to test alternative insurance offerings,” Pritchett explained. “Compared [with] the US and Europe, Asia is seen to have relatively low barriers to entry, a high population base and fairly light regulations – making it highly conducive for testing innovative options. The UK is positioning itself well as our government and regulators continue to build fintech bridges with Asia, to help reduce regulatory barriers and support growth in a post-Brexit world.”

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