Happy hump day, !

This week, we delve into the military health insurance market, demonstrating the effectiveness of governments-backed healthcare specific initiatives

In Europe, France is positioned as the main Insurtech promoter, snagging 6 out of the top 10 largest European Insurtech deals in 2024.

Commercial Auto Premiums have been consistently increasing in the U.S since 2000, marking a 1.2X climb with repair costs, claims from litigation and accident frequency acting as main drivers.

— Insurance 150 Team

Table of Contents

• Data Dive

• Trend of the Week

• Market Movers

• Insurtech Corner

• Deal of the Week

• Macroeconomics

• Interesting Articles

• Tweet of the Week

Military Healthcare: A Lifeline of Stability for Those Who Serve

Military healthcare coverage in the U.S. has remained a pillar of stability, ensuring consistent access to medical services for active-duty personnel, veterans, and their families. Programs like TRICARE provide a robust safety net, with enrollment levels demonstrating resilience even as the broader healthcare landscape faces ongoing challenges. 

A closer look at TRICARE highlights its comprehensive reach, covering millions of beneficiaries, from active-duty members to retirees and survivors. The program plays a critical role in addressing the healthcare needs of military communities, with services spanning routine outpatient care, emergency treatment, and prescription support. 

The impact of military healthcare becomes even more evident when compared to civilian insurance coverage. Veterans experience significantly lower uninsured rates than the general population, underscoring the effectiveness of government-backed healthcare initiatives. While challenges remain, such as maintaining efficiency in private-sector partnerships and managing prescription access, military healthcare continues to set a strong example of how structured and well-funded systems can provide near-universal coverage.

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GenAI scaling Challenge in Insurance

Insurance is bringing up the rear when it comes to scaling GenAI. Only 7% of insurers are deploying AI at scale, compared to 33% in software and 18% in media. Even oil and gas—an industry not exactly known for tech innovation—has more than double the insurance sector’s adoption rate (18%). Meanwhile, telco (10%) and banking (13%) are also moving at a more measured pace, but they’re still ahead. The message? Insurance isn’t ignoring AI, but it’s still stuck in pilot mode (67%), while others are pushing ahead.

The slow adoption isn’t for lack of use cases. From underwriting to claims automation, AI has the potential to shake up core insurance processes. But the sector’s regulatory complexity, legacy systems, and inherent risk aversion are keeping many players on the sidelines. Compare that to software and retail, where AI is already a must-have for efficiency and competitive edge. The insurers that crack the scaling challenge first will have a serious advantage.

If history is any guide, insurance will get there,eventually. The industry isn’t known for being first to the party, but once it moves, it moves fast. The firms that treat GenAI as more than just a pilot exercise will be the ones reshaping the future of insurance. Everyone else? They risk being stuck writing policies for a world that’s already moved on.

Insurtech’s Emerging Market Playbook

Venture capital is setting its sights on emerging insurtech hubs, and Asia is leading the charge. Between 2022 and 2023, the “Rest of Asia” category captured a hefty 12.9% of global VC investments in the space, outpacing established players like India (8%) and Southeast Asia (5.5%). The trend signals a shift in investor appetite, as firms look beyond traditional markets for high-growth opportunities in digital insurance solutions. From embedded insurance to AI-driven underwriting, these regions are leapfrogging legacy systems and building insurtech models tailor-made for mobile-first economies.

LATAM (3.1%) and Africa (1%) are still in the early innings, but the momentum is real. Rising smartphone penetration, regulatory tailwinds, and a push for financial inclusion are making insurtech a critical play in these regions. While Oceania lags at 0.5%, the broader picture is clear: the next big insurtech boom won’t come from the usual suspects. Investors hunting for the next breakout market are looking East—and the smart money is following.

Twelve Capital and Securis Unite to Form ILS Powerhouse

In a strategic move reshaping the Insurance-Linked Securities (ILS) landscape, Twelve Capital and Securis Investment Partners have merged to create one of the largest independent ILS managers globally, boasting $8.5 billion in assets under management. This merger combines their expertise to offer a comprehensive suite of ILS solutions to a diverse investor base.

Advising on this landmark transaction, Homburger represented Twelve Capital, with a team led by partners Hansjürg Appenzeller and Daniel Daeniker. Securis and its stakeholder B-FLEXION were counseled by Lenz & Staehelin, with partner Andreas Rötheli at the helm. Skadden, Arps, Slate, Meagher & Flom LLP provided additional legal support to Securis and B-FLEXION.

This merger signifies a significant consolidation in the ILS sector, positioning the combined entity as a formidable force in the market.

The Rate Reset Reality Check

The Fed’s latest rate cuts aren’t just an academic exercise—they’re reshaping how businesses operate, invest, and borrow. With the Interest on Reserve Balances (IORB) and the federal funds rate (DFF) stepping down, the cost of capital is easing. That’s good news if you’re carrying debt, considering expansion, or looking for cheaper financing. Private equity sponsors and corporate acquirers should find more favorable lending conditions, which could heat up dealmaking in the months ahead.

But before we pop the champagne, there’s a trade-off. Lower rates mean capital gets deployed more aggressively, potentially reigniting inflation risks. If demand rebounds too fast, the Fed might have to tap the brakes again—leaving businesses caught in another cycle of tightening. And while rate cuts typically boost valuations, insurers and lenders relying on investment income might take a hit.

Bottom line: The cost of money is falling, but the risk of overheating remains. Smart capital allocation will separate the winners from the wishful thinkers.

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