There has been a raft of US insurtechs recently going public, leading to speculation that European insurtechs might follow suit.
In the US, the trend was kick-started by home and renters Softbank-backed insurance provider Lemonade, which went public last summer.
Pay-per-mile car insurance provider Metromile followed suit, going public via a special purpose acquisition company (SPAC).
Oscar Health, a tech-enabled medical insurance provider, also went public and Hippo, the home insurance agency, is also going public via a SPAC.
Yet this trend has not been replicated in Europe, despite rapid growth in the market, which has been heightened during the pandemic as many European insurtech upstarts have thrived during lockdown.
But many European insurtechs seem, for now, content to remain private entities, aided by flush private markets.
According to CBInsigths, the total insurtech funding of 2020 hit an all-time high of $7.1billion, an uplift of 12 per cent on the year.
But observes being this might soon change, as European insurtech founders feel the pull of the public markets.
Founders might be attracted by potentially greater funds, wanting to improve their public profile, or as an exit strategy for founding executives via going public.
Here The Fintech Times speaks to three insurtech executives and asks them their thoughts on whether a wave of European insurtech IPOs is on the horizon.
Christian Wiens, CEO and co-founder of Getsafe, the German insurtech, believes we will see a similar wave in Europe.
Wiens said: “Yes. We observe that insurtech has long been seen as a less attractive sibling of fintech, but it is now becoming one of the hottest markets for venture capital.
“Zego’s $150 million round in March, French insurtech Alan’s $220 million round for its health insurance app in April, and just now the mega-round of German neo-broker WeFox are all testament to this.
“Insurtechs are now racing to catch up to fintechs, both in the US and in Europe, and despite the pandemic.”
European Insurtech IPO
Nick Mair, co-founder of DQPro, an insurtech that provide data monitoring and software for the insurance market, believes there will be a European insurtech IPO, but not a cluster like in the US.
Mair said: “You still have very strong private equity interest from that market. In terms of IPO, I am sure there is going to be a European IPO of note at some point, when perhaps markets improve slightly. That is only a matter of course.
He added: “I don’t think it will happen as fast [as the US]. I don’t think a swathe will happen, purely because the US is still the world’s largest market.
“And the opportunity there is much greater, so it makes the economics around an IPO work perhaps a bit better.
“In Europe, we are still waiting for companies to get to sufficient scale to achieve that. Having said that there are some great insurtechs that are venture-backed that are making progress and probably going to get there eventually.”
Buoyant and active
Dylan Bourguignon, CEO, SO-SURE, the UK-based insurtech, said the US public markets are a “lot more buoyant and active” for tech businesses compared to Europe.
He said: “That said, in the UK and in Europe I think we are building very solid and attractive businesses that will be highly attractive for the public markets.
“I might even be so bold as to say because of the capital market constraints we have for earlier stage businesses than you have in the states, I think you will probably find that, especially in insurtech, there is just higher quality businesses being built.
“I suspect the public capital markets will be even more excited when those opportunities arise from the European insurtechs.
On an expected wave of IPOs across Europe, Bourguignon said: “As a whole, I think Europe has had a lot of businesses that have been growing over a long period of time and kept in private ownership because there is a very dynamic private equity market.
“And there’s many different other types of exits that can be generated for the earlier stage investors than just the IPO.
“But that doesn’t mean that IPO won’t necessarily be an option that insurtechs will be considering,“ he added.