New NTT DATA Study Reveals Investment in Insurtech Reaches 7 Billion, Surpassing Pre-COVID-19 Levels

The Insurtech Global Outlook 2021 report finds insurance firms invested nearly $1.6 billion in startups, a 61% increase from 2019 to 2020

PLANO, TX – June 3, 2021 – NTT DATA today announced the fifth edition of its Insurtech Global Outlook 2021, a study that analyses the main trends, challenges and opportunities in the insurtech ecosystem, and the impact advanced technologies and new business models had throughout 2020. The findings show that COVID-19 accelerated usage-based insurance, telemedicine, diagnosis tools and distribution digitalization.

The study dives deeper into how the insurance industry fared through the pandemic, revealing that 2020 was a year in which both insurers and insurtechs managed to mitigate the consequences of COVID-19 in an extremely agile and streamlined way. For these companies, the pandemic served as another reminder of the importance of digital transformation, with COVID-19 creating increased urgency to improve digitalization processes.

“Insurtechs are now perceived as a valuable asset by insurance companies, with the pandemic serving as a stark reminder of the positive impact insurtech can have on their businesses,” said Bruno Abril, Partner, NTT DATA EMEAL, Insurance. “Learning about these companies in detail and what their contributions may be within the sector translates into knowing how to take advantage of new opportunities and face challenges moving forward with better guarantees of success.”

Greater investment, innovation, personalization, and technology
Not only have insurtechs been able to overcome the uncertainty generated by COVID-19, but they have also managed to attract more investment. The study also shows that, despite an unstable economy, investment has remained at levels before COVID-19.

The pandemic also shined a light on key shifts in consumption models in the insurance industry, including an increased focus on personalization. As a result, there was a clear acceleration of new personalized models, with pay-per-use, telemedicine, diagnostic tools, and the digitalization of distribution growing in 2020. Usage-based insurance and wearables, for example, have gained further momentum during the year and as a result, there were increased investments and income announcements for these areas in 2020.

When it comes to technologies such as Artificial Intelligence (AI), insurers and startups are using unique data sets and AI to reduce and manage claims costs while helping clients prevent unwanted events. IoT also experienced growth across the insurance industry, with technology like wearables impacting health and life insurance, as well as impacts on home insurance with leak detection devices or flooding. Overall, cross-cutting technologies supported all business lines, while also contributing to improved customer experience and increased efficiency.

Emerging markets and regional differences in investments
While insurtech investments overall were up in 2020, it was not the case for all markets. Specifically, Europe experienced a 31% increase in insurtech investments and Asia saw an 11% increase, but the North American market saw investments reduced by 17%.

The concentration of investment is in the most advanced round startups and more consolidated models (the so-called outliers) with operations of more than 100 million dollars, mainly located in the United States and Asia. However, the study also shows that the largest number of operations are in younger companies that are beginning to use their models (the so-called standards) and that complement the value offer, in addition to transforming part of their value chain. These companies are mainly European, and the operations are around five million dollars.

The report reveals considerable interest in investing in companies in two territories: The United States (with 45 of the 68 companies analyzed and 1.4 billion dollars) and Asia (11 companies and 437 million dollars). Europe, on the other hand, registered 18 companies with an investment of only 116 million dollars. This activity is a response to a need for constant innovation in a landscape monopolized by a private healthcare model, as is the case in the United States, while in Asia it is a consequence of the growing improvement in people's quality of life and their greater purchasing power. Lastly, the study also confirmed that the American market is positioned five years ahead of the rest of the investment levels of each of the regions considered.

For further information, download the complete report here.