November 30, 2023

LONDON, Aug 4 (Reuters) – Global investment in insurance technology companies totaled $2.41 billion in the second quarter, down 50 percent from a year earlier, as investors were nervous about frothy valuations, the stockbroker said in a report. Gallagher Re on Thursday.

Insurtech companies make up about 10% of the fintech industry and have seen several successful fundraises in recent years. German digital insurance startup Wefox last month said it had raised $400 million from investors, valuing the business at $4.5 billion. Read more .

But some companies have struggled to compete with established players and have suffered from the big selloff in tech stocks.

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Shares in U.S. general insurer Lemonade ( LMND.N ) have more than halved since it went public two years ago.

One issue is that blockchain – a database shared between computers in which records are difficult to change – seen a few years ago as a way for insurers to cut costs and become more efficient, has not lived up to expectations. of.

“Blockchain is a binary decision – it’s great for things like accounting,” said Andrew Johnston, global head of insurtech at Gallagher Re, adding that by contrast:

“Insurance is negotiable, extremely flexible, and ongoing. Blockchain also happens to be extremely expensive.”

Falling valuations could lead to insurance tech M&A deals or divestitures, which were “unlikely” six months ago, Johnston said.

However, insurtech investment rose slightly from the first quarter, gaining 8%, according to the report.

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Reporting by Carolyn Cohn. Edited by Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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