What insurtech activity in Canada looked like in 2022
Canada saw a total of 14 insurtech deals in 2022—and 3 deals in Q4 alone, according to the latest Gallagher Re Global InsurTech Report for Q4 2022.
Overall, Canada saw more than $125 million in funding volume for insurtech investments in 2022.
And while this year was the most active year ever for global insurtech participation (with more countries than ever making deals), insurtech deals dropped to 106 in Q4, the lowest number of deals since 2020 Q4.
2022 marked a year where insurtechs had to be extra diligent about their margins, and about the likelihood of near-term funding rounds, commented Andrew Johnston, global head of insurtech at Gallagher Re.
Globally, annual funding for insurtechs halved between 2021 ($15.80 billion) and 2022 ($7.98 billion).
Plus, quarterly insurtech funding for Q4 fell to the lowest level since 2020 Q1, decreasing 57% quarter over quarter from $2.35 billion in Q3 to $1.01 billion in Q4.
But while insurtech investments weren’t remarkable in 2022, the year has been “the most important year” for insurtech to date, writes Johnston.
“2022 began with a lot of uncertainty, with a number of macroeconomic factors …impacting venture capital,” he writes. “With the downturn of investment came the revision of company values and a rethinking of what ‘success’ should mean in a more conservative environment.”
Several insurtechs, Johnston said, experienced micro-company hardships in 2022.
“The aforementioned hardship has resulted in a number of different InsurTech businesses being forced to make some decisions that would have been previously unthinkable, even as recently as in the last 12 months. Several businesses have publicly laid staff off, and in more extreme cases, been forced to shut shop. We estimate(d) that at the end of 2019, there were nearly 3,000 global InsurTech businesses. We estimate that currently there are 2,050 businesses that are actively open for business.”
As a Canadian example, Vancouver-based insurtech Apollo Insurance laid off members of workforce of about 125 people across Canada.
But Canadian insurtechs were not the only ones affected by layoffs.
Earlier in the year, Lemonade, a U.S.-based insurtech, saw its share price cut more than in half. Staff cuts accompanied this, with Lemonade reducing staff at Metromile by 20% after completing acquisition of the pay-per-mile insurer in late July.
Other global insurtechs also trimmed staff. India-based Nova Benefits cut 30% of its team, and U.K.-based Zego cut 17% of its workforce this summer.
However, some insurtechs may have ceased operations without announcements, making it difficult to get real data on which companies no longer exist, Johnston says.
“Staff layoffs have been profoundly visible, especially with better known InsurTechs. In some extreme cases, InsurTechs have laid off up to 40% of their working headcount, which for larger InsurTechs can translate into 300 to 500 people in one swoop.”
This particular issue is not exclusive to insurtechs, as many of the most notable tech companies have undergone public layoffs.
Overall, Canada’s new global position by deal count is 7 at the end of 2022.
Canada is succeeded only by the United States, United Kingdom, China, India, Germany and France. These countries (in order of highest global position) including Canada were in the same global position prior to 2022 Q4.
2022 was the first year to see an overall year-on-year drop in insurtech investment since 2016, Gallagher Re reports.
Feature image by iStock.com/Funtap
