The insurtech funding landscape in Latin America has seen a dramatic decline, reaching a historic low of $26 million in the first half of 2024, representing a staggering 78% drop from the same period in 2023. This decline continued over the 12-month period from July 2023 to June 2024, with total funding amounting to just $43 million, the lowest on record. Despite this significant downturn in venture capital investments, the insurtech ecosystem in the region has shown remarkable resilience, achieving 16% organic growth and continually expanding. With over 77 new ventures introduced, the sector now consists of 498 startups, highlighting an essential growth phase even amidst financial constraints.
Regional Performance and Growth
Brazil Leads Startup Count While Chile and Colombia Follow
In Latin America’s insurtech landscape, Brazil retains its position as the dominant player with 203 startups, a number that far exceeds those of other countries in the region. South America’s largest nation remains a stronghold for insurtech, driven by its sizable market and sheer demand for innovative insurance solutions. Chile stands as the second-largest hub with 72 startups, while Colombia follows closely with 67. This distribution indicates a concentrated effort in some of the region’s most economically dynamic countries.
The Pacific region has also shown some of the highest percentage growths, with notable increases in Central America (69%), Ecuador (35%), Colombia (24%), and Peru (23%). These figures represent burgeoning opportunities and increased adoption of insurtech solutions across diverse geographies, signaling robust regional growth despite the overall decline in funding. International expansion has contributed to this growth, with an 11% rise in the first half of 2024 and a total internationalization index reaching 13.4%. Such trends are vital for understanding the adaptive strategies insurtech startups are employing to thrive despite challenging financial landscapes.
Multilatina Startups and Market Dynamics
One significant development in the Latin American insurtech ecosystem is the emergence of multilatina startups—those that operate across multiple countries. These entities now represent 13% of the market. Peru and Chile are at the forefront of this evolution, driven largely by scalable business needs that demand expansion beyond domestic markets. This trend underscores a critical strategy for survival and growth, as international presence mitigates local market volatility and taps into broader opportunities.
Conversely, Brazil’s unique market dynamics mean it exports very few insurtechs. The country’s distinct regulatory environment and mature market can sustain local startups but pose challenges for those looking to thrive internationally. Despite this, Brazil bears the highest startup mortality rate at 12%, pointing to both opportunities and risks within its borders. By contrast, Argentina and Colombia have demonstrated improvements with lower mortality rates of 4% and 7%, respectively. These figures highlight the varied scenarios across nations and accentuate the importance of multilatinas in ensuring business longevity.
Sector Focus and Ecosystem Dynamics
Shifts in Insurtech Focus Areas
The report highlights significant shifts in the focus areas of insurtech startups. Currently, 53% concentrate on distribution, a figure that is down by 6% compared to 2020. Traditionally, these distribution-focused startups have specialized in personal lines like auto and home insurance, often operating under Broker and Managing General Agent (MGA) models, which comprise 42% of the sector. This decline suggests a diversification of insurtech ventures into other realms within the insurance ecosystem, reflecting evolving market needs and opportunities.
Meanwhile, the role of enablers—startups providing crucial technological tools and platforms to enhance insurance services—has increased by six percentage points over the past four years, now accounting for 47% of the ecosystem. This rise underscores a growing recognition of the value enablers bring to traditional insurance models, helping to streamline operations, reduce costs, and improve customer experience through technological innovations. Such developments are key to understanding the shifting dynamics within the insurtech landscape and the strategic pivots necessary for sustained growth.
Mortality Rates and Entrepreneurial Resilience
The annual mortality rate of insurtech startups has dropped to 10%, with 49 closures over the past year. Remarkably, 92% of these closures were local ventures, emphasizing the crucial role multilatinas play in business continuity and resilience. Brazil, despite its leading position in the startup count, faces the highest mortality rate at 12%, reaffirming the risks inherent in its market. However, Argentina and Colombia’s lower mortality rates reflect positive trends and improved survivability within these countries’ ecosystems.
Industry leaders, such as Hugues Bertin, CEO and Founder of Digital Insurance LATAM, and Carlos Cendra, Scouting & Investment Lead at MAPFRE Open Innovation, have noted the sector’s resilience. Recognizing the substantial drop in the mortality rate from 13% to 10%, they praise Latin American entrepreneurs for their tenacity and dedication to driving sector growth despite limited funding sources. This entrepreneurial spirit and commitment to innovation are foundational to the region’s ongoing development and its ability to adapt to financial constraints while pursuing expansion and technological advancement.
Conclusion
The insurtech funding scene in Latin America has experienced a steep downturn, hitting a historic low of $26 million in the first half of 2024, marking a dramatic 78% decline from the same period in 2023. Over the 12 months from July 2023 to June 2024, the downward trend continued, with total funding reaching just $43 million, the lowest figure ever recorded. Despite the severe drop in venture capital investments, the insurtech sector in the region has demonstrated notable resilience. Impressively, the ecosystem has managed to achieve 16% organic growth and continues to expand. In this challenging financial climate, more than 77 new ventures have been launched, bringing the total number of startups in the sector to 498. This indicates a critical phase of growth and innovation, even as financial support wanes. The sustained expansion highlights the underlying strength and potential of the Latin American insurtech market, positioning it for future recovery and development even amidst significant funding challenges.
