News
US InsurTech funding doubled in Q3
US InsurTech funding doubled in Q3 with California-based companies closing quarter of all deals
Key US InsurTech investment stats in Q3 2024:
- US InsurTech funding doubled in Q3 YoY
- California continues to dominate the US InsurTech space after it secured a quarter of all the deals in the region for Q3
- Sedgwick, a global leader in claims management, secured the largest US InsurTech deal for the quarter with a funding round of $1bn
In Q3 2024, the US InsurTech market experienced a significant increase in funding despite a decline in deal activity compared to the previous quarter.
The sector recorded 41 funding rounds, a 38% drop from the 66 deals completed in Q3 2023.
InsurTech companies in the US raised a substantial $1.91bn in Q3 2024, more than doubling the $955m raised in the same period last year.
However, this funding figure is skewed by a $1bn funding round raised by Sedgwick, a global leader in claims management, loss adjusting, and tech-enabled business solutions.
Removing this outlier, third quarter funding would be $908m, resulting in a 5% drop in funding in comparison to Q3 2023.
As mentioned, Sedgwick secured the largest US InsurTech investment of Q3 2024 with a strategic $1bn equity commitment from Altas Partners.
This investment, part of a transaction valuing Sedgwick at approximately $13.2bn, brings in Altas alongside current major investors such as Carlyle and Stone Point Capital, reinforcing Sedgwick’s growth trajectory.
Known for its innovative claims-handling platform and expansive service offerings, Sedgwick manages millions of claims across casualty, property, marine, and benefits sectors annually.
The partnership with Altas is poised to bolster Sedgwick’s international expansion, technological advancements, and operational resilience, reinforcing its position as a pioneering force in the InsurTech landscape.
FinTech Global
AI in Insurance
The $100 Billion Opp for Generative AI in P&C Insurance Claims Handling
Quick Take
- Generative AI is set to revolutionize P&C claims handling, promising up to $100 billion in economic benefits by slashing loss-adjusting costs and leakage.
- 41% of financial services companies recently surveyed by Bain & Company are using generative AI at full production.
Generative AI is having a profound impact on the property and casualty insurance (P&C) world, promising to save insurers up to $100 billion by cutting claims handling costs and reducing costly "leakage"—when what’s paid out doesn’t match what’s contractually owed.
Bain & Company estimates AI could lower loss-adjusting expenses by 20-25% and reduce leakage by a hefty 30-50%. But scaling up successful AI pilots will be key to unlocking this potential, requiring insurers to revamp workflows and adopt fresh tech capabilities.
Claims processing is the core of an insurer’s operations and the biggest cost center too. With inflation, supply chain issues, and climate impacts pushing up expenses, insurers are looking for ways to cut through the chaos. And Generative AI could do just that, by improving payout accuracy, reducing time spent on admin tasks, and even helping adjusters make quick decisions on litigation based on historical case data.
A few big players are already testing the waters: Zurich, for instance, is using six years of claims data to refine underwriting with AI, while a South American insurer reports a 50% productivity boost and a potential 40% drop in leakage through AI-powered claims management.
Earnix Survey Reveals Majority of Insurers Plan to Implement AI Predictive Models Within Two Years
After years of uncertainty, majority of Insurers are ready to take the next steps to implement more effective strategies to grow their business
Earnix, the leading AI, real-time platform for intelligent decisioning SaaS solutions for the insurance and financial services industries, today announced its third annual survey on the state of the insurance market, the 2024 Industry Trends Report. The survey of over 400 global insurance executives uncovers key findings, trends, implications for what’s next in insurance, and sheds light on the role technology can play in shaping a better future.
“In today’s constantly changing landscape, it is critical for organizations to leverage AI models that provide real-time analytical data, enabling them to increase collaboration and innovation, drive product and business growth, and gain and retain market share”
Key findings from the 2024 survey include:
- More than two-thirds (70%) of respondents expect to deploy AI models that make predictions based on real-time data in the next two years
- More than half of respondents (51%) report their company had to pay a fine or issue refunds due to errors in the last year
- 58% of respondents take more than 5 months to implement a rule change and 21% take longer than 7 months
- Insurers still need to move beyond legacy systems and fully modernize their operations, yet 49% admit they are behind schedule
Rackspace is Powering Up So That Insurers Can Get More From AI -
Rackspace Technology® (NASDAQ: RXT), a leading hybrid, multicloud, and AI technology services company, today announced the expansion of Rackspace Spot with a new geographic location and an on-demand GPU-as-a-Service powered by NVIDIA accelerated computing. The expansion comes as the demand for compute power is expected to continue to grow at a rapid pace. According to IDC, AI datacenter capacity is “projected to have a compound annual growth rate (CAGR) of 40.5% through 2027.” Rackspace Spot addresses that demand as a premier platform for computation-intensive applications like artificial intelligence, machine learning, and data analytics by providing on-demand, fully managed Kubernetes clusters delivered through a unique open market auction.
“Rackspace’s GPUaaS will give customers on-demand access to powerful accelerated resources optimized for AI, machine learning, data analytics, and graphics rendering workloads,” said Brian Lillie, President of Private Cloud for Rackspace Technology. “With Spot GPUaaS, you can harness high-performance GPUs without substantial upfront investments in hardware, achieving both cost-efficiency and scalability.”
The Rackspace Spot GPU-enabled platform is hosted in our newest next-generation Rackspace SJC3 data center in Silicon Valley. The state-of-the-art facility offers enhanced performance and reliability, providing customers with advanced infrastructure from the ground up.
Research
InsurTech priorities for 2024 and beyond
Big tech is facing more challenges than ever before, forcing companies to adjust their priorities amid a challenging fundraising market. Just a few years ago, in booming funding times, jobs were plentiful and employees left their companies en masse — the "great resignation." Companies across verticals struggled to fill positions as prospective employees weighed the many options in front of them. Today, things could not be more different.
The technology industry has seen more than 86,000 layoffs in 2024 alone. At Embroker, our recent Tech Risk Index report found 44% of tech companies are struggling with employee retention at the entry and executive levels. Which raises the question: is tech losing its appeal for workers?
People, prices, problems
It's clear there is significant concern over cash flow within the industry: 59% of tech leaders report struggling with the rising cost of business, despite the fact that only 20% report prioritizing funding in 2024. Following the rising cost of business, tech companies' top threats included inflation (54%) and rising interest rates (37%). While these financial concerns won't go away immediately, further interest rate cuts should help in due time. Tech companies are expected to see a variety of upswings, from an IPO market rebound and increased M&A activity to an increase in pre-deal investor activity, above record-breaking 2021 levels.
InsurTech/M&A/Finance💰/Collaboration
Allstate and Arlo Team Up to Boost Home Protection Just in Time for The Holidays
As the holiday season nears, Allstate and Arlo, a leading smart home security brand, are introducing a smarter way to protect homeowners with The Arlo Total Security bundle for Allstate.
“This exclusive package, offered at a special reduced price, helps homeowners rest easy with Arlo’s advanced security system backed by a three-year extended protection plan from Allstate,” said Suren Gupta, president, protection products and enterprise services at Allstate. “It’s affordable, simple and connected protection, arriving in time for the holidays when people are on the go and packages are arriving.”
The Arlo Total Security bundle for Allstate includes 24/7 professional monitoring, all necessary hardware (such as the Security System Keypad Hub, 5 All-in-One Sensors and 2 essential 2nd Gen Outdoor cameras), and an Allstate Protection Plan.
“Arlo and Allstate have a shared mission to deliver peace of mind to consumers,” said Matthew McRae, CEO of Arlo Technologies. “The Arlo Total Security bundle for Allstate provides tremendous value, combining our award-winning hardware and service with Allstate-backed protection at an affordable monthly price.”
Events
2024 SEMA Show Attendees Enjoy Opening Day in Las Vegas - Autobody News
The 2024 SEMA Show hit the ground running Nov. 5 at the Las Vegas Convention Center, welcoming more than 160,000 attendees to the annual automotive aftermarket trade show. The show runs through Nov. 8.
Before the show floor officially opened, the SEMA Kickoff Breakfast offered addresses from SEMA President and CEO Mike Spagnola and Board Chairman Kyle Fickler, as well as an on-stage conversation between emcee Jarod DeAnda, celebrity and car enthusiast Jay Leno, and automotive influencer Tavarish, and presentations of the coveted New Product Awards in 18 categories.
REVV ADAS and I-CAR were winners in the ADAS and Collision Repair & Refinish categories, respectively.
“This week is all about innovation, discovery and networking,” said Spagnola, adding the power to fuel new ideas is “the real magic of the SEMA Show.”
“No matter what happens tonight, or tomorrow, or whenever, SEMA has your back,” Fickler said.
With that, the doors opened to allow attendees to explore 1.2 million square feet featuring more than 2,400 exhibitors.
COLLISION INDUSTRY CONFERENCE
The quarterly Collision Industry Conference (CIC) returned to Las Vegas on Nov. 5 as it does every year as part of SEMA week.
CIC room Cyber protection was the focus of a presentation by the Data Access, Privacy and Security Committee, offering real-world best practices to avoid having digital systems hacked or becoming a victim of ransomware. Shaughn Kennedy of Spark Underwriters cautioned that cyber incidents are generally excluded from most business insurance policies without a special rider.
Financial Results
WTW takes sizeable net loss even as revenue climbs
WTW has reported its financial results for the third quarter of 2024, posting revenue of US$2.29 billion, a 6% increase from US$2.17 billion in the same period last year. Revenue rose 6% on a constant currency and organic basis.
However, the company also disclosed a net loss of US$1.67 billion for the quarter, following a net income of US$139 million in the prior-year period. This shift was attributed to non-cash losses and impairment charges exceeding US$1 billion related to the pending sale of TRANZACT.
Adjusted EBITDA for the quarter was US$501 million, or 21.9% of revenue, up 15% from US$436 million, or 20.1% of revenue, in Q3 2023. WTW reported a U.S. GAAP tax rate of 16.1%, while the adjusted income tax rate used for calculating adjusted earnings per share was 19.7%.
Climate/Change/Sustainability/ESG
Insured losses from Spain floods predicted 'well above' €1 billion
Morningstar DBRS: Some areas received a year's worth of rain in just eight hours.
Insured losses from extreme flooding in parts of eastern and southern Spain is predicted to rise well above €1 billion (or $1.09 billion), according to Morningstar DBRS. . Triggered by torrential rainfall on Oct. 29, 2024, flooding impacted the Spanish regions of Valencia, Albacete, Cuenca and eastern Andalusia. Morningstar DBRS said at least 95 people are confirmed dead, with widespread damage to property and infrastructure including people, properties, vehicles, businesses and the agriculture sector.
Climate Change Has Intensified Storm Rainfalls by 20%: Study
The heavy rain that hit much of the southeastern U.S. during Hurricane Helene is part of a long-term trend, according to new research led by Texas A&M University Regents Professor of Atmospheric Sciences and Texas State Climatologist Dr. John Nielsen-Gammon.
The study, published in the Journal of Applied Meteorology and Climatology, also involved Savannah Jorgensen, a graduate student who completed her master’s degree in atmospheric sciences through the project.
Their research was funded by the National Oceanic and Atmospheric Administration (NOAA) and the Harris County Flood Control District
Hailstorms Drive Record Insurance Losses as Experts Push for Better Detection and Prediction
Severe hailstorms in 2023 and 2024 have driven historic losses in the U.S., spotlighting hail as one of the most costly weather perils in insurance.
Notably, Denver endured Colorado’s second-costliest hailstorm earlier this year, while Texas saw melon-sized hail that damaged infrastructure so severely it required road-clearing measures.
Hailstorms, classified under severe convective storms (SCS) along with tornadoes and thunderstorms, contribute to a significant portion of U.S. insured losses annually, as explained by Dr. Victor Gensini, an expert in atmospheric science and meteorology professor.
The growing trend in hail-related losses can be attributed to several factors. Urbanization places more people and properties in vulnerable areas, while inflation raises repair and replacement costs. Climate change may also play a role; according to research, warmer temperatures could contribute to larger hailstones, even if overall hail frequency decreases. Such trends are already impacting insurance premiums and repair expenses, with damages from hailstorms exceeding $50 billion in 2023 alone. Critical infrastructures, such as solar farms, are also highly susceptible, with some suffering millions in losses from single events.
Ongoing research efforts aim to improve prediction and reduce hail risk. The ICECHIP initiative, funded by the National Science Foundation, will allow researchers to study hail formation directly in the Great Plains, gathering valuable data to enhance forecasting. Meanwhile, the proposed Center for Interdisciplinary Research on Convective Storms (CIRCS) plans to unite academic and industry stakeholders, offering the insurance sector data and tools to better anticipate and manage hailstorm impacts.
Gensini notes that these advances could help insurance and reinsurance sectors mitigate hail risks, creating more resilient solutions for high-risk areas.