The Council also caught up with Chris Downer of XL Innovate this week. Downer is a principal at XL Innovate who focuses on insurtech investments in North America, Europe and Asia. He is responsible for due diligence and deal sourcing. Downer also pens a daily email (signup required) highlighting the latest insurtech developments.
Do you see any notable shifts or surprises over the last 18 months regarding commercial insurtech investment trends?
What has surprised us is how little activity commercial insurtech has seen, relative to personal lines. Our analysis, based on CB Insights data, shows that over $1 billion has been invested in companies that are addressing commercial insurance since 2015, which equates to roughly 10 percent of total insurtech investment. What does that mean? Regardless of how you slice it, commercial insurtechs have been woefully under-financed relative to insurtechs addressing personal lines, distribution, and other areas. As a result, commercial insurtech is heavily under-penetrated relative to the broader insurtech movement. Even existing commercial ventures have been concentrated in more obvious areas like distribution and auto. In fact, since 2015, those two categories account for over half of commercial insurtech funding to date. Very few startups are looking at more complex areas. This has to—and will—change.