VCs bet big on insurtechs with $1.2 billion in Q2 2024.

TLDR:

• VCs invested $1.2 billion in insurtechs in Q2 2024 according to PitchBook.
• This marks some positive signs for the insurtech sector, but caution remains due to past market declines.

Key Elements:

Insurance used to be attractive to investors in the late 2010s with companies like Lemonade attracting billions in venture backing. However, things took a turn in 2021 when the interest rate policy era ended. While insurtech is still getting investment, growth is expected to be slow. The sector faces challenges including slow adoption of new technologies by incumbents and impact from climate change.

In Q2 2024, $1.2 billion was invested in insurtech across 106 deals, showing an increase in deal value and count. However, public insurtech companies are still recovering from market value declines. Sub-areas like cyber and climate insurance have gained attention, and AI is being used to improve underwriting processes.

Investors have learned that insurtech operates within a slow-moving industry, so previous high-water marks in investments are not expected to be reached again. While insurance may not be as attractive as it once was, both traditional insurers and insurtech companies are here to stay.