S&P: "Full Stack" Insurtech Enterprises Shine For 2021 US Insurtech to see More M&A, Heightened Investor Interest.

S&P's latest Global Market Intelligence report on the insurtech market, sees the creation of U.S. insurtech companies that both sell and underwrite policies (a.k.a. full-stack) accelerated in 2020, aided by an abundance of venture capital. This trend is likely to continue in 2021, which will in turn spur more private capital raises, M&A activity and new carrier formations.

KEY HIGHLIGHTS INCLUDE:

* The trend of companies going "full-stack" (both selling and underwriting policies) is in full swing and likely to continue. The report provides a roundup of companies that have done so in the P&C sector, and highlights select digital agencies with the potential to go this route in the future.

* Venture capital funding to the U.S. insurtech sector took a hit in April, but has since rebounded and should remain strong in 2021, aided by a host of factors laid out in the report. But 2022 and beyond are less clear, given a decline in the rate of startup formation.

* IPOs and M&A activity will likely abound in 2021, as the insurtech companies that were part of the startup boom in 2015 and 2016 have matured and are now considering exit events for their investors.

* In percentage terms, growth in direct channel U.S. private auto premiums should continue to outpace the U.S. private auto insurance industry as a whole in 2021. But while buying online seems ideally suited to consumers sheltering in place, direct channel writers have not been spared the pandemic's impact to driver behavior and economic conditions.

The creation of U.S. insurtech companies that both sell and underwrite policies (a.k.a. full-stack) accelerated in 2020, aided by an abundance of venture capital, according to S&P Global Market Intelligence's latest insurtech market report. This trend is likely to continue in 2021, which will in turn spur more private capital raises, M&A activity and new carrier formations.

The full-stack model is particularly prevalent in the property and casualty sector, where S&P Global Market Intelligence identified roughly a dozen companies as of Dec. 10, 2020.

The health insurance market has produced some large full-stack companies as well, including Oscar Insurance Corp., Collective Health LLC and Clover Health Investments Corp. They are relatively scarce in the life insurance market, but we are aware of one: Bestow Inc. The Dallas-based startup created a carrier subsidiary, Bestow Life Insurance Co., in 2018 and announced the acquisition of Centurion Life...