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LONDON, Aug 4 (Reuters) – Global investment in insurtech companies totaled $2.41 billion in the second quarter as investors jittery about frothy valuations, broker Gallagher Re said in a report on Thursday. USD, down 50% year-on-year.

Insurtechs make up around 10% of the fintech industry and have successfully raised funds in recent years. German digital insurance startup Wefox said last month it had raised $400 million from investors, valuing the business at $4.5 billion. read more.

But some companies are finding it difficult to compete with incumbents and have been affected by a broad sell-off in tech stocks.

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Shares in U.S. general insurer Lemonade (LMND.N) have more than halved since going public two years ago.

One problem is that blockchain — a database shared across computers in which records are hard to change — was seen a few years ago as a way for insurers to cut costs and increase efficiency, but it hasn’t lived up to its expectations.

“Blockchain is a binary decision – it’s very useful for things like accounting,” said Andrew Johnston, global head of insurtech at Gallagher Re. Instead, he added:

“Insurance is highly negotiated, highly flexible and ongoing. Blockchain also happens to be very expensive.”

Falling valuations could lead to an insurtech M&A deal or sale that was “unlikely” six months ago, Johnston said.

However, the report showed that insurtech investment picked up slightly from the first quarter, up 8%.

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Reporting by Caroline Cohen; Editing by Cynthia Osterman

Our standard: Thomson Reuters fiduciary principles.

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