A technology-focused investment bank, ICON Corporate Finance, predicts that digital transformation in the InsurTech sector may be a sweet spot for M&A and investment for the remainder of 2020. COVID-19 has accelerated digital transformation across all industry sectors, which may drive future growth and tech company acquisitions, particularly in the InsurTech sector.
A recent ICON survey shows that acquisition activity has been abundant in the tech sector in 2020 and is expected to expand into the areas of FinTech, Cloud, Managed Services, HealthTech, CyberSecurity, AI and Enterprise Software. As organizations adapt to new ways of working, companies in the US tech market will continue to be amongst the most acquisitive, as they continue to seek out emerging technologies and disruptive young companies that are reshaping the world.
According to Pitchbook Data's Emerging FinTech research, customization in the insurance sector will likely be a key trend in new products, and digital delivery models will create more opportunities to bundle across asset categories, while enabling start-ups to take market share. Pitchbook’s researchers view the $1.4 trillion insurance market as a highly fragmented value chain ripe for disruption, where deep-pocketed conglomerates will continue their push into the industry. Two notable examples of this trend are Alphabet's $375 million investment in Oscar Health and the joint venture among Amazon, Berkshire Hathaway and JP Morgan.
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