Guidewire, which provides software to P&C insurers, has acquired or invested in three venture-backed insurance tech startups in 2016 year-to-date.
On-demand personal tech insurance app Trov‘s $25.5M Series C marked the first-ever strategic investment for publicly-traded P&C insurance software provider Guidewire, according to CB Insights. Other investors in the round included lead investor Oak HC/FT, Anthemis Group, and SunCorp (Trov is also the Australian insurer’s first strategic investment).
Guidewire, which today sees a market cap of $4.14B, joins a growing set of strategic investors in the insurance tech space including XL Innovate, AXA Strategic Ventures, and Munich Re/HSB Ventures, among many others.
Guidewire’s investment in Trov is its second investment or acquisition of a venture-backed company in 2016. The company acquired FirstMark Capital-backed predictive analytics insurance software firm EagleEye Analytics in March. Update: Guidewire made its second acquisition of the year in August, acquiring FirstBest Systems.
As the chart below highlights, Guidewire’s venture investment marks the first in recent years for publicly-traded insurance software companies including Majesco, Sapiens, and Ebix. Prior to the Trov deal, these companies had restricted themselves to M&A deals.
We asked Neil Betteridge, VP of Strategy of Guidewire, for some additional perspective on Trov, future venture investments, and some of the lack of true innovation he sees among insurance tech startups.
On Trov as a strategic investment: “Because they’re helping our insurer customers tap into new market opportunities for single-item insurance, that’s something that naturally complements the work we’re already doing with many insurers who are using Guidewire portals to sell and service traditional products like personal auto insurance, homeowner’s insurance … so this presented an opportunity for our insurer clients to sell a new type of product in single-item insurance.
The other upside we see for our insurer clients is reaching demographic segments that have traditionally been less engaged with existing distribution channels so Trov [is] a fit for some of the younger demographics who have traditionally been underprotected in terms of lacking coverage for their homes and belongings.”
On future Guidewire investments: “We’re open to doing additional venture investments if the right opportunity arises. Data and analytics remains an area of keen interest for us, that’s what motivated the EagleEye acquisition. What’s interesting to us when we look at a tuck-in acquisition is companies who understand how to use data and analytics to tackle challenges in underwriting, claims handling, managing the cost of losses as well as helping insurers shift their mindset from indemnity after something that has happened, to protection or preempting unfortunate events.”
On the rise of insurance tech startups: “Some of the insurance tech startups we see, the value prop seems to be making easier or friendlier versions of things that our insurer customers have already been doing for years leveraging existing solutions.”
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