Insurance 2022 - the year ahead
A new generation of insurtechs will emerge in 2022
09 December 2021
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Insurance 2022 - the year ahead
Company growth, investments into the industry, interest in new technology, and alternative to IPO route all driving deals
M&A deals involving insurtechs will accelerate to reach new levels in 2022. This will include deals in which insurtechs are the targets of larger existing players in the insurance industry. However, there will also be an increasing number of deals with insurtechs as the acquirors and/or deals between insurtechs.
Insurtech M&A activity in 2022 will be fueled by several key drivers. The insurtechs that have done well and grown in size over the past several years are now at a stage when they are either attractive targets for incumbents in the insurance industry or are at a size at which they have the heft to go shopping for acquisitions themselves including to become full-stack businesses. Inflow of investments into the insurtech industry has continued at a rapid pace over this past year, albeit often focused on the successful existing insurtechs, which means that insurtechs with solid funding can put some of it to use for their own acquisitions.
At the same time, incumbent insurance industry members are increasingly seeing acquisitions of insurtechs as a more attractive way to bring in-house new technologies, businesses, and know-how instead of homegrown development. Finally, investors in insurtechs see sale of their investments as an attractive exit alternative to the IPO route, which also will fuel M&A activity.
Insurtech M&A activity had already picked up speed in 2021. During this past year, we have seen transactions such as the acquisition by insurtech Lemonade of another insurtech Metromile and insurtechs acquiring shell insurance companies to become full-stack as in the acquisition by Pie of Western Select Insurance. The new year is expected to bring many such deals in the insurtech space.
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