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Investors flocking to APAC insurtechs with hybrid distribution, B2B models

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Investors flocking to APAC insurtechs with hybrid distribution, B2B models

Asia-Pacific's private insurance technology landscape may be dotted with several unconventional startups seeking to unseat incumbents, but venture capitalists will gravitate toward less disruptive and more collaborative technology startups.

S&P Global Market Intelligence data shows at least 335 private insurtechs operating in Asia-Pacific, with about 122 of them disclosing $3.66 billion in aggregate capital raised via private placement deals.

China and India are collectively home to nearly half of private insurtech companies in the APAC region. The two markets will continue to corner the lion's share of investor interest, thanks to their large and fast-growing insurance markets.

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Investors are mostly backing digital marketplaces that drive business to existing carriers. Tech vendors streamlining existing carriers' back-office operations are the second-largest in number, although they accounted for a small percentage of the total amount raised. Growing competition in the online intermediation space, especially in China, could prompt investors to focus on less crowded and more profitable niches. We believe the vendor model will gain more investor attention as a result.

The APAC region, with most of its insurtechs complementing existing carriers, presents a contrast to the U.S., where private capital is skewed toward full-stack companies looking to disrupt the incumbents.

Regulatory restrictions on the issuance of carrier licenses in the APAC region will limit growth in the number of tech companies seeking to both underwrite and sell policies. But the small number of existing digital carriers will see a growing share of the aggregate amount raised by insurtechs, thanks to their high capital needs. We believe digital carriers that embrace both offline and online distribution channels will see faster growth.

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