Market Trends of Israel Life & Non-Life Insurance Industry
This section covers the major market trends shaping the Israel Life & Non-Life Insurance Market according to our research experts:
Growing Fintech Funding in Israel
Israel's fintech (financial tech) sector saw a significant funding boom in 2021, with investments in fintech startups and companies reaching $4.5 billion over the year, according to a report published this week by Israeli investment firm Viola Group. That figure marked a 136% increase from 2020, which saw $1.9 billion in funding, according to the study.
Funding for fintech startups made up 17% of the overall investments in Israeli tech companies, the highest figure in six years, with, mega-rounds single investments of USD 100 million or more fueling the lion's share of growth in the fintech space. Mega rounds amounted to nearly USD 3 billion of the overall funding total in 2021.
Companies that raised significant funding in 2021 included Melio, the developer of a payments platform geared toward small and medium-sized US businesses, with a Series D round of USD 250 million at a valuation of $4 billion; Tipalti, a developer of payments and compliance tech platform with a USD 270 million investment; and business management software firm HoneyBook with a USD 250 million investment in late 2021 preceded by a USD 155 million investment earlier in the year 2022.
In addition, 17% of all Israeli unicorn private companies valued at USD 1 billion or more are fintech or insurtech (insurance tech) companies. (Insurtech is often a fintech sub-sector). In addition to Melio, Honeybook, and Tipalti, among such unicorns are Rapid, which facilitates multi-currency payments; Fundbox, a financial services and tools company that recently raised USD 100 million; and Next Insurance, a Silicon Valley-based insurance startup founded by Israeli entrepreneurs that use machine learning to provide individualized policies to customers.
In the public markets space, 23% of all IPO mergers for Israeli companies in 2020 and 2021 combined were fintech companies. These include Payoneer, a developer of payment processing technologies, Riskified, fraud prevention for an e-commerce firm that went public on the New York Stock Exchange last summer, and insurance companies Hippo and Lemonade.
Increase in GDP Per Capita
GDP per capita is a very important indicator of the economic strength of a country and a positive change is an indicator of economic growth. Per capita shows the country's affordability. The per capita income of the country has increased in recent years and is expected to continue. An increase in the GDP per capita can boost the insurance industry.
Before the onset of COVID-19, Israel's economy had grown continuously for the previous 15 years, averaging around 3.5 % GDP growth annually. During this time, Israel's GDP per capita rose steadily. However, the cost of living has also risen substantially, limiting advances in Israel's living standards. COVID-19 pushed Israel's unemployment rate above 20 % in 2020 (including those on leave without pay). In November 2020, The Economist projected that Israel's real GDP growth rate would be -5.2 % in 2020 and 2.9 % in 2021.
