Will 2024 be Better? Reflection on 2023 Venture Capital in InsurTech

By David Gritz and Camila Faria

As 2023 comes to a close, it’s safe to say that the InsurTech investment landscape underwent a significant transformation this year, reflective of broader shifts within the tech and insurance industries. Amidst a backdrop of global economic recalibration, venture capital infusion into InsurTech startups witnessed a discernible contraction, marking a departure from the previously bullish years. This year’s investment climate, while cautious, has not dampened the innovative spirit that drives the sector forward, and strong startups continued to receive support while strengthening strategies to optimize costs.

Many founders have asked us in 2023, did investor pacing slow down? So, we tapped our network to get you access to the live data. And, we will use that data and our discussions with VCs in InsurTech to help you understand why and where we are going in 2024.

InsurTech Investment Trends in 2023

The insurtech sector of 2023 has been a crucible of challenge and change. Investment patterns have taken a sharp detour from the exuberant heights of previous years, as highlighted by a report by Dealroom.co, Mundi Ventures, MAPFRE, NN Group, and Generali. A 45% plummet in venture capital funding to $2.4 billion in the first half of the year marks a retreat not seen since 2018. This mirrors a broader 51% decline in overall venture capital funding, signaling a reevaluation of investment strategies across the board.

Despite the downtrend, the resilience of “good” startups, as noted by Mapfre’s global head of transformation, Joan Cuscó, is evident in their ability to secure capital. This selective endurance reveals a pivotal theme of 2023 — quality over quantity.

Despite funding headwinds, the sector’s commitment to digital transformation and enhanced customer experience remains unshaken. Insurers continue to embark on core systems upgrades, making it easier for InsurTechs to work with them. And, almost any life insurer you speak to is looking for new forms of distribution to close the uninsured and underinsured gap. Distribution-centric startups continued to attract interest from investors as long as they could prove traction.

Data from the Trenches – InsurTech Investment Pacing

Most reports on InsurTech are published with secondhand data from CB Insights and Crunchbase that is not 100% validated. So, we decided to contact the VCs directly for the data after an initial review of Crunchbase and their websites.

For our research, we contacted 20 Venture Capital firms that explicitly have InsurTech investing as part of their strategy or are primarily funded by single insurer LP. 18 of the firms shared their data with us and 11 allowed us to publish their data. The data is current as of January 10, 2024.

The data below shows the number of new investments (excluding follow-ons) per partner

InsurTech NY’s examination of top VC funds pacing in 2023 unveils a landscape of discernment and precision. Most funds focused on supporting their existing portfolio companies to get them to default alive status instead of funding the next wave of startups.

Markd‘s pronounced increase in investments illustrates a bold and strategic assertion of confidence in the industry’s potential. In contrast, other seasoned investors like Munich Re Ventures and Nationwide Ventures have recalibrated their portfolios, indicative of a broader investment community treading with caution as funds are increasingly seeking out ventures that not only innovate but also demonstrate a clear path to profitability and scalability.

The consistency from firms such as Sure Ventures, which neither increased nor decreased their investment frequency, reflects a considered approach in an unpredictable market. Looking back on the year’s trends, partner Gopi Rangan commented, “Insurance is a large industry with many opportunities for innovation. Unlike in the years past, startups with healthy unit economics will build a strong foundation to transform the industry. I am excited to see many positive trends in the upcoming year ahead.”

The data reflects that InsurTech Fund, our fund was the third most active on a per partner basis. While it may seem like an anomaly, it is directly in line with our strategy to support 5 – 8 new startups per year from our fund. Since we sit in the seed stage, we must act as a feeder for many of the later-stage funds and our pacing reflects that trend.
Forecasting 2024: Expectations and Opportunities

We are also excited about positive trends in 2024. We are looking forward to the next generation of Insurance products in niche and specialty markets like those who have gone through our MGA Lab. Parametric solutions like Sola and Otonomi can simplify cover; cat-exposed solutions like Greenshield Risk and SPIN can support policyholders in states where larger insurers have left the market; and new category solutions like Batteryze and 5×5 can expand or enable commercial markets to function. This trend for new products will coincide with deeper integration with big data, AI, and predictive analytics to improve risk selection and workflow automation.

With all of the opportunity ahead of us, we see Venture Capitalists pivoting in 2024 to make new investments once their current portfolio is protected.

If you are a founder who is actively raising money in Q1, we want to hear from you about your experience. Happy to add your experience or quote to the bottom of this article. Please respond to our LinkedIn Post or reach out at contact@insurtechny.com.

Meet the Digital MGA Lab Cohort 2023

We proudly announce that the Digital MGA Lab Cohort 2 has been selected.

Meet our cohort of 12 companies with their associated lines of business.

5×5 Aviation Insurance

General Aviation

Agtools

Crop Contract Cancellation

Batteryze

Battery Warranty

Flora

Fertility

Green Shield Risk

CAT exposed homeowners

Hammurabi Insurance

Medical Stoploss

Invive

Term Life

Jove

Small business

LossPay

Luxury auto residual value

Otonomi

Air cargo

SPIN

Florida homeowners

StartSure

Small business

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Learn more about InsurTech NY’s Digital MGA Lab Program.

We are thrilled to introduce our esteemed cohort of innovative companies paving the way in the insurance technology landscape. Each member brings unique expertise and solutions to the table, collectively shaping the future of digital insurance.

As we unveil this exceptional lineup, we invite you to explore the diverse array of companies and their respective lines of business. From aviation insurance to crop contract cancellation, our cohort covers a broad spectrum of insurance sectors, demonstrating the versatility and dynamism of the digital MGA ecosystem.

At the heart of our program lies collaboration, innovation, and empowerment. Through the Digital MGA Lab, these companies have access to invaluable resources, mentorship, and networking opportunities, propelling them towards success in the ever-evolving insurance landscape.

Join us in celebrating the achievements and potential of our Digital MGA Lab Cohort 2023. Together, we are redefining insurance for the digital age.

InsurTech NY to Sponsor Spencer Educational Foundation Donation Drive

New York, Feb. 8, 2023 — InsurTech NY will sponsor a donation drive for the Spencer Educational Foundation in connection with its  InsurTech Spring Conference 2023, taking place March 29 – 30 in NYC.

For two days – February 9th and 10th –  InsurTech NY will be donating a percentage of its ticket sales to the Spencer Educational Foundation to help support tomorrow’s risk management leaders.

The conference will feature a Spencer-led panel discussion on how insurers can attract the next generation of talent into the insurance industry with a focus on DE&I and diversifying the pipeline. The panel will feature students who have been awarded Spencer grants or have been through its internship programs.

The student panelists will appear in front of more than 700 people at Pier 60 in NYC. “Spencer’s mission is to raise awareness of the risk management and insurance profession among students,” said Tandeka Nomvete, Director of External Engagement at Spencer. “Providing exposure to the new and emerging technologies from InsurTechs will provide a unique opportunity for our students to experience the impact of the InsurTech wave.”

The InsurTech Spring Conference will host two tracks – Life and Health and Property and Casualty. Attendance at the conference is expected to exceed 700 people and it will host a mix of insurance carriers, insurance brokers, InsurTech startups, and venture capitalists. The conference will feature more than 120 speakers across topics from embedded insurance, third-party data, workflow automation, AI in claims management, and InsurTech and regulator collaboration.

“We look forward to the opportunity to support students in risk management and insurance,” said David Gritz, Managing Director of InsurTech NY. “The insurance industry is not a common career aspiration for teenagers, but it represents one of the most stable and entrepreneurial industries. My hope is long-term we can inspire more young people to consider a career in insurance at an early age.”

About InsurTech NY

InsurTech NY is an international gateway to bring together the insurance innovation community. It brings together carriers, brokers, investors, and InsurTech startups via educational and networking events, a competition, an accelerator, and a startup lab. InsurTech NY’s mission is to accelerate corporate innovation, drive talent to insurance, make regulation innovation-friendly, and improve access to investment. See more at www.insurtechny.com or follow the company on social at linkedin.com/company/insurtechny.

About Spencer Educational Foundation

The Spencer Educational Foundation is a 501(c)(3) nonprofit organization funding the education of tomorrow’s risk management and insurance leaders through scholarships, grants, internship opportunities, on and off-campus experiential learning, and support of risk management/insurance curricula. Since Spencer was founded in 1979, we have awarded nearly $9 million in scholarships and over $8 million in grants to universities and professional institutions impacting an estimated 70,000 students through our programming. For more information, please visit us at www.spencered.org. 

Contact: David Gritz

press@insurtechny.com

212-634-9516

This article was published in February, 2022. For up to date news from InsurTech NY on New York City InsurTech startups, click here. For upcoming events and conferences, check out our events page here.

New York City InsurTech Startup Map

Ever wondered how many InsurTech startups are in NYC?  Just look at this map of NYC insurtech startups specific to Manhattan from Fall 2021 to get an idea.  The community is constantly changing and growing, and InsurTech NY is excited to be supporting entrepreneurs, carriers, and investors seeking the next game-changer for the insurance industry!

Are you part of our community?  Contact us to find out ways we can work together.  And don’t forget to signup for our newsletter on our website, or via linkedin too!

We are pleased to announce the launch of The InsurTech Fund (the “Fund”,www.insurtechfund.com), a partnership of PLG Venture Capital, LLC (PLGVC), and InsurTech NY (ITNY). 

PLGVC is a New York-based venture capital firm with over 70 years of combined experience among its partners as operators, investors, and entrepreneurs in the financial services sector, including insurance.

ITNY is a leading ecosystem of InsurTech innovation, supporting startups through an annual pitch competition and an annual accelerator program.  ITNY also hosts public events throughout the year and an annual InsurTech conference every March.

The Fund will invest in early-stage companies from seed through series A. The team will focus on investments in the insurance sector in the U.S. and Canada.  For more information, please contact Erick Pereda at erick@plgvc.com.

NEW YORK, March 12, 2021 — InsurTech NY, announced the winners of its 2021 Early-Stage Global InsurTech Startup Competition at the InsurTech Spring Conference. Winners were selected by judging panels grouped by their background – angel investors, venture capitalists, carrier and brokers, and the Bermuda BDA. The winners received prizes worth $200K in total.

Carrier/Broker Prize: Tide Foundation
VC Investor Prize: Loadsure
Angel Investor Prize: Delos Insurance
Bermuda BDA Prize: RemitRix

Over 120 eligible startups applied to the Global InsurTech Startup Competition. Startups were eligible if they had less than $250,000 in annual revenue. The judges selected winners who showed the most commercial potential. The selection process employed 26 judges including Avanta Ventures, Greenlight Re, Nationwide Ventures, Transverse Insurance, Gallagher, MGV, SixThirty, Park City Angels, and Anthemis.

“We are proud to highlight the 2021 global winners,” said David Gritz, Managing Director of InsurTech NY. “Helping high-potential early-stage startups ‘get discovered’ is necessary to foster a dynamic and sustainable InsurTech ecosystem.”

“Programs like this provide a crucial platform for emerging technologies,” said Michael Loewy, co-founder of Tide Foundation. “We plan to use this exposure to strengthen our position in the insurance vertical and expand our technology to reduce global cyber liability.”

“We are excited and honored to be selected as the angel investor prize winner,” said Kevin Stein, CEO of Delos Insurance. “New MGAs in markets like ours benefit from broad exposure because we can help provide new products for reinsurers, insurers, and brokers, and change the lives of policyholders that were non-renewed because of misclassification in wildfire zones.”

The four Global InsurTech Startup Competition winners were selected from the top 13 finalists that presented at the InsurTech Spring Conference on March 10, 2021. The other nine original finalists included: Claimspace, Coastal Risk, Coverhero, Digisure, Dockflow, Finaeo, HealthyHealth, Safekeep, Startsure.

NEW YORK, Jan. 5, 2021 /PRNewswire/ — InsurTech NY has opened the application window for their annual 2021 InsurTech Early-Stage Competition (www.insurtechny.com/competition).

The competition will award $200,000 in prizes to three winning teams. Startups will compete for the title of the company with the most commercial potential. Top teams will have the opportunity to present their business to a panel of judges at the InsurTech Spring Conference held March 10th-11th, co-hosted by InsurTech NY and InsurTech Hartford.

The finalists from last year’s competition gained investment and broad exposure to their business as a result of the competition. “The InsurTech NY competition has been a tremendous opportunity for us to get many more people excited about our unique offering,” said Itai Ben-Zaken, CEO of Agilius and winner of the 2020 early-stage competition.

Judges for the competition will be evaluating startups for potential investment or pilot opportunities. They comprise angel investors, venture capitalists, and insurance carriers including New York Angels, Park City Angels, Anthemis, Sure Ventures, Transverse, Nationwide, GreenlightRe, and Grange Insurance.

“The hardest part for any InsurTech is gaining the initial traction and relationships necessary to get to a first customer,” said David Gritz, co-founder of InsurTech NY. “By supporting the next crop of early-stage InsurTechs, we can create a sustainable ecosystem for insurance innovation.”

Early-stage companies eligible for the competition are InsurTechs that had less than $250,000 in revenue in 2020. The top 10 finalists will be invited to present at the InsurTech Spring Conference and will be announced in early March 2021. The deadline for submissions is January 29, 2021.

Once life adapts to the new normal, December 2020 will be remembered as a special month. The month of the vaccine. Prior to December, Mumps was the fastest vaccine to make it to the market that was developed by a vaccine savant, Maurice Hilleman. (Full NPR Story) This process was functionally manual, using a live virus and evolving the virus via chicken embryos.

Fortunately for us, vaccine science has evolved since 1967, and a once theoretical technique of using mRNA to develop a vaccine may now become the new standard.

That brings us back to insurance. Imagine how the world could change if 4-year processes could be done in 11 months. If the entire industry came together for change. In a way, that is happening. The InsurTech community is driving change, but many of us are still caught up in low-interest rates and the next six months.

To help you get beyond 2021, InsurTech NY has decided to use March as an opportunity to look out four years to 2025. And, we have partnered with InsurTech Hartford, in the spirit of bringing the industry together. Join us on March 10-11 for a discussion on 2025, for our InsurTech Spring Conference, themed Catering to the Customer of 2025.

Upcoming InsurTech Events and Programs

InsurTech Spring 2021 Conference: Catering to the Customer of 2025 (Pre-registration)
Mar 10 – 11 | 2 Full-Days | Educational Content, Virtual Expo, and Networking | Virtual
– 75+ speakers, 20+ startup pitches, 2 global competition
– Two most active InsurTech communities in North

InsurTech NY Sponsors

Thank you to our sponsors for supporting the community: E2Value, EY, ClarionDoor, Locke Lord, Britecore, Guidewire, Eversheds Sutherland, EIS

InsurTech New York Area Deals and Opportunities

Discover a curated mix of November and early December insurance financings, exits, partnerships, and opportunities in the New York area.

Smartvid.io ($5M, IA Capital) Commercial Lines: AI-powered construction safety platform to help companies identify their highest risk projects and to act to prevent incidents from occurring.

Battleface ($12M, Greenlight Re) Personal Lines: Speciality travel insurance for travelers visiting or working internationally.

Centivo ($34M, B Capital Group) Health Lines: Administrator of self-funded health plans for employers.

Novidea ($15M, JAL Ventures) Multi-Line: cloud-based agency management system (AMS)

OneShield (Undisclosed, Bain Capital) P&C Lines: A portfolio of core system platforms for policy management, billing, claims, rating, and business intelligence.

CAIS Group ($50M, Eldridge) Wealth Management: financial technology platform for financial advisors who seek improved access to and education about alternative investment strategies.

DataRobot ($320M, Altimeter Capital) Multi-Line: Enterprise AI platform democratizing data science with end-to-end automation for building, deploying, and managing machine learning models.

FinPay Holding ($5M, Montreux Growth) Health Lines: Automating patient engagement to deliver cost transparency, education, and affordable payment options for patients.

Openly ($40M, AVP) Personal Lines: A technology-enabled, high-end home MGA.

Jornaya (Acquisition amount undisclosed, Verisk): Proprietary behavioral data to help marketing teams improve consumer engagement through an understanding of buying journeys.

Interested in Volunteering?

InsurTech NY is actively looking for individuals looking to connect deeper into the InsurTech community. If you are interested, email us at contact@insurtechny.com.

Best,
David and Tony
InsurTech NY Team

This article was published back in October, 2020. For information and news regarding the InsurTech NY Accelerator program today, check out this link. For information regarding this year’s Spring Conference, click here.

With our accelerator program more than halfway done, understanding the startups in the cohort would not be possible without knowing the story of how the cohort came to be…

New York has always been a FinTech dominated city. It was a natural home for FinTech with the vast majority of banks headquartered in the City. However, there has always been healthy competition with San Francisco for the best talent, funding, and startup HQs.

Flashback to 2015, InsurTech was in its infancy; Lemonade (NYC), Policy Genius (NYC), Zenefits (SF), and Hippo (SF) just started. Meanwhile, the support ecosystem – VCs, corporate innovation teams, event organizers, and accelerators were nascent. At first, the Bay Area earned the title as the InsurTech hub when SVIA held its first dedicated InsurTech conference, Zenefits raised $500 million to become a Unicorn, and ITC chose its home in Las Vegas.

The intervening years were marked by a back-and-forth swapping between SF and NYC for the title of top InsurTech city. In 2019, Carrier Management named NYC, InsurTech capital, a true insurtech city, and we started InsurTech NY.

Our vision was to create a sandbox in the NYC metro area where InsurTechs could play and gain an unfair advantage. We also saw a need for growth-stage startups between late seed-stage and Series B to cross the chasm to profitability and develop additional carrier/broker partnerships.

To support those startups, we have partnered with 18 insurance carriers and brokers to launch our accelerator and selected 22 startups:

Life and Annuities Lines: Amenity Analytics, Best Fit, Breathe Life, Everyday Life, Fenris, Gerald App, Insurmi, IXN, Sensely, Sorcero, and Vymo