InsurTech: Outlook Positive

Investors are expected to become more confident in the FinTech sector, including InsurTech startups, as fallout from the Brexit vote in the United Kingdom and uncertainties associated with the U.S. Presidential election stabilize.

A quarterly report from KPMG and CB Insights says that while many investors in Europe and North America took a break from deploying capital in the third quarter of 2016, fintech investment is expected to regain momentum in the fourth quarter of the year and into 2017.

In the third quarter of 2016, venture capital-backed fintech companies raised $2.4 billion across 178 deals, accounting for 83 percent of the $2.9 billion in overall global fintech funding.

Both the number of deals and value of investments were lower than in the second quarter of the year, and when compared to the third quarter of 2015.

Still, the outlook is positive, with InsurTech and other sectors flagged for growth, the report said.

“Over the next few quarters, artificial intelligence is expected to gain more investor attention in addition to RegTech, InsurTech and data and analytics.

At the same time, fintech areas that have emerged over the past year (particularly blockchain) may receive more scrutiny as investors assess when and if investments will deliver returns.”

(RegTech refers to technologies that reduce the cost of regulatory compliance and improve risk outcomes for financial institutions.)

InsurTech VC-backed global investment activity totaled $204 million across 22 deals in the third quarter of 2016, KPMG and CB Insights noted.

The U.S. led the way with 10 InsurTech deals and $104.7 million in investment activity, followed by Germany with 4 deals and $47.2 million in investment.

The top InsurTech deals in the third quarter were pay-per-mile auto insurer Metromile ($50 million in funding), cybersecurity analytics services provider Cyence ($40 million in funding) and insurance brokerage app FinanceFox ($28 million in funding).

Year-to-date some $10.3 billion has been deployed globally across 612 fintech deals through the first three quarters of 2016, according to the report.

Read about the top InsurTech deals of the year as reported by Insurance Networking News here.

More stories on InsurTech over at the I.I.I. Insuring California blog here.

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