Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

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RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Categorized | Insurance

Investors plan to disrupt insurance

Posted on October 3, 2016

A trader reacts as he monitors financial information on computer screens on the trading floor at Panmure Gordon & Co. in London, U.K., on Friday, Jan. 22, 2016. At least 40 stock markets around the world with a total value of $27 trillion are in bear territory, as investors witness the worst start to a year on record. Photographer: Chris Ratcliffe/Bloomberg©Bloomberg

As fast as entrepreneurs have been coming up with insurtech ideas, investors have been rushing to fund them.

Much of the backing is coming from traditional venture capitalists who see insurance — with its large, well-established incumbents and well-worn products — as fertile territory for disruption. 

“There have been more investors in the past year than there have in previous years,” says Matthew Wong of CB Insights, which analyses start-up fundraising. “You are seeing investors that have entered the VC ecosystem that weren’t around a few years ago. There are also fintech-focused investors such as Nyca Partners.”

The other big source of funding for start-ups is large insurance companies. “Quite a few of them are forming venture arms,” says Mr Wong. “Some of them see it as a financial opportunity but a lot are looking for strategic benefits. They are also investing in complementary technology such as connected devices.”

Ten ‘insurtech’ start-ups that are causing a stir

Links between traditional insurers and new players are critical for both

By investing in start-ups, insurers hope to have an early look at technology that could change the industry, while getting the opportunity to experiment with new products or services. By owning a stake in the start-ups, insurers also put themselves in a strong position to make an offer for any companies they see as particularly promising. 

Among the big US insurers that have established venture arms are MassMutual, Transamerica and American Family, while the big non-US names with venture arms include Axa, Allianz, XL and China’s Ping An. 

They have been busy in 2016. According to CB Insights, insurers made 27 investments in 2014 and 61 in 2015. This year they are on track to push that to 79. They are also getting more daring. While investments two years ago were fairly evenly split between early and late-stage funding rounds, this year the early stages have dominated. CB Insights points out that insurers have been particularly enthusiastic investors in companies developing technology for connected devices.