Asia is experiencing highest rate of growth in insurtech investments

Asia’s insurtech sector has increased in breadth and depth in recent years. With the region currently poised as the fastest-growing global market for insurtech investment the tech space remains key to the transformation of Asian insurance business, according to Clyde & Co.

According to Global insurtech market report, while the US is still the leading region for overall insurtech investments, Asia is experiencing the highest rate of growth in venture capital investments. In fact, it was up 58% year-on-year, as of mid-2023.

According to Dealroom report, a number of Asian jurisdictions, including China, have been rolling out policy initiatives to promote digital transformation of financial services. And in the short term, we believe the rate of growth is likely to be higher in Southeast Asian jurisdictions.

Global insurtech VC funding

Global insurtech VC funding

While Thailand in particular has seen continued investment from local players, the Southeast Asia region as a whole has also attracted investment from multinational insurers, particularly for insurtech solutions related to personal lines business.

There is also optimism that inward investment into the insurance sectors in Mainland China and the Hong Kong SAR will rise steadily in the next year.

Global VC funding/market size (2022-2023)

Global VC funding/market size (2022-2023)

As such, appetite from the region’s tech-savvy population for insurtech-driven products is likely to attract further investment into this space in 2024.

For example, the insurtech space in Singapore is becoming more vibrant, attracting the most investment of all Asian markets in the first half of 2023, and this is expected to continue into next year.

Joyce Chan, Partner Clyde & Co

Insurtech business in Thailand also remains buoyant, alongside other Southeast Asian countries such as Indonesia

Joyce Chan, Partner Clyde & Co

Despite this, the global environment for insurtech investment could remain challenging for some start-ups. It’s likely that only those companies that have already established themselves as market leaders, or service providers that offer genuinely innovative and unique solutions, are going to attract interest from capital providers.

The global insurtech market is expected to grow from US$8.07 billion in 2021 to $10.42 billion in 2022, at a compound annual growth rate (CAGR) of 29.2% – worth $29.75 billion by 2026, with a CAGR of 30%.

According to FMI, the insurtech market is forecasted to reach a net worth of $ 165.4 Bn in 2032.

This growth has been linked to the increase in insurance claims following higher levels of hospitalisations during the Covid-19 pandemic.

Insurtech is used to make the claims process easier, as well as evaluate risk, process contracts and underwrite policies. Therefore, an increased number of claims drives the need for technology that can make the process more effective and efficient for customers and companies, reflected in the forecasted CAGR.

Peter Sonner   by Peter Sonner