Cyber insurance: a golden pot or how to lose money?
Cyber insurance was one of the fastest-growing insurance segments and is often regarded as one of the top trends in insurtech.
Now the winds are changing. What happened?
Demand for cyber insurance grew very fast and insurers started to hand out policies to capture the market. Things went well until last year with a loss ratio of around 43%, then spiked up to 72% last year. Basically, insurers are now losing money on cyber insurance and things are getting even worse with rising crime. For instance, ransomware payments surged to $590M in the first six months of 2021, more than the $416M in all 2020. And now the Log4Shell vulnerability is breaking the internet.
Insurers have rushed to repair. Price has alreadyincreased 32% as of July and is expected to keep going up,even doubling by 2023. Policies have become more stringent and in many cases, coverage is being denied. Even Lloyd's of London, which has around a fifth of the global cyber market, has discouraged its members from taking on cyber business next year.
On the other hand, a new breed of cyber insurance startups believes their insurance model is sustainable. They haveraised $1.4B this year, a 600% increase from last year and three of them reached unicorn status (AtBay, Coalition and BitSight).
🏫 Congress gets a crash course on cryptocurrency - New York Times. Top executives from Coinbase, Circle, FTX, Bitfury, Paxos and Stellar Development Foundation, appeared in front of the congress to discuss regulation.
🇺🇸 Nydig, which provides Bitcoin investment and technology solutions to insurers, banks, corporations and institutions, has raised $1 billion led by WestCap. Other backers in the round include Bessemer Venture Partners, Morgan Stanley, FIS Global, Affirm, New York Life Insurance, Fintech Collective, Mass Mutual and Fiserv. 🇳🇱 🇩🇪 Core banking provider Mambu has raised €235M at a €4.9B valuation led by EQT. Mambu’s platform powers the likes of N26, OakNorth, Tandem and traditional banks such as ABN AMRO. Good time to check out our “Core banking: banks' defence against the fintech threat” deep dive.
🇬🇧 Monzo, one of Britain’s first digital banks, has closed a $500m round at an increased valuation of $4.5bn. The company has suffered several setbacks in the past, with its valuation halved after 2019, the failure to enter the US market, heavy financial losses and leadership changes. Does the new investor confidence signals they are back on track?
🇺🇸Insurtech AgentSync has raised $75M at a $1.2B valuation, a 6x jump in valuation since March this year. AgentSync provides API for the management and compliance of insurance sales for insurers, carriers and agents.
Other notable fintech deals from around the globe:
🇺🇸 🇩🇪 TRMLabs andPassbase have raised $60M and $10M respectively to help companies with AML and KYC for crypto services. 🇺🇸 Corporate spend and cash management company Rho has raised a $75M Series B led by Dragoneer Investment Group. Rho focuses on SMBs looking for frictionless workflows across banking, cards and accounts payable.
From this week it is even easier to spot upcoming trends. Curated content like lists and landscapes can now be filtered to show funding stats. We explain it here in this short video finger 👉 Have a look!
This is Dealroom's weekly fintech newsletter. You can subscribe here to get more industry-specific intelligence on the evolving world of fintech, emerging trends, and game-changing startups. Delivered on Wednesdays.
Dealroom.co, Cornelis Dirkszstraat 27-2, 1056 TP, Amsterdam, The Netherlands
