Investment in insurtech grew strongly between 2018 and 2019,funding rounds galore, and looked set to continue thriving until the pandemic hit in 2020. However, as of mid-2021, insurtech outliers are breaking the pandemic gloom and attracting some groundbreaking investment.

GlobalData’s Smart Money Analytics tool finds that global investment in insurance dropped by 17.3% in 2020 compared to the previous year, reaching a total value of $3.5bn. The drop emphasises the impact of COVD-19 and the economic uncertainty that left investors feeling wary.

However, despite the drop, the tool also finds that not all insurtechs have been impacted equally by the pandemic’s economic slowdown. According to the tool, businesses focused on “enabling business solutions” in insurance were the worst hit from investors, experiencing a 66.8% drop in investment for 2020 compared to 2019. On the other hand, insurtechs with a heavy focus on AI capabilities experienced a 6.1% increase in investment for the same corresponding period.

The diversion in insurtech investment for 2020 emphasizes that certain insurtech themes are proving to be more essential since the start of the pandemic. One area of interest has been product personalisation through data analytics and digital claims processes. Insurtechs that have focused on these areas have been able to continue thriving. Examples of these insurtechs include wefox, Bought By Many, and Wejo.

wefox, a Germany-based insurtech focused on personal lines, utilizes data analytics to achieve a better loss ratio when measuring customers’ risks. Recently, wefox raised $650m in series C funding, reaching a $3bn valuation. Similarly, Bought By Many, a pet insurer using customers’ data to create tailored and flexible policies, has raised $350m, reaching a $2bn valuation. Additionally, Wejo, a vehicle data analytics firm that can price consumers’ motor insurance premiums more accurately, launched a special purpose acquisition company, raising $330m.

Before the pandemic, it was rare for insurtechs to raise hundreds of millions of dollars in one funding round, let alone be able to reach a $1bn valuation.

However, the pandemic has accelerated the demand for digital and personal insurance services. Increasing consumer demand for digital services shows no sign of abating. More and more tech-centric players in the insurance space are now able to raise enough funding and reach multi-billion-dollar valuations. The success of insurtechs’ recent funding rounds proves that such start-ups have been able to insert themselves successfully into the insurance value chain.

As insurtechs continue to grow, they could prove to be real contenders to the well-established insurers in the industry. The pandemic has made it obvious and clear that consumer demand for digital services shows no sign of abating and that digitalisation is the key to staying relevant in the future market environment.