Decline due to decrease in mega-round deals, says Gallagher Re
Global insurtech funding has dipped below the billion-dollar mark amid a lack of mega-round deals during the first quarter of 2024, according to Gallagher Re.
In a new report, the global reinsurance broker revealed that insurtech funding in the first quarter of the year amounted to just $912.3 million. This is a 17.3% decrease from the previous quarter, making Q1 2024 the lowest period for global Insurtech funding in four years.
Andrew Johnston, Gallagher Re’s global head of insurtech, said the market has continued to see a “funding reset” since insurtech investment peaked in 2021.
The report highlighted a drop in the average size of insurtech deals, which sat below $10 million for the first time since the third quarter of 2017.
Despite the decrease in deal size, the number of insurtech deals increased to 107 from 100 in the previous quarter. Early-stage funding also increased 26.5% quarter-over-quarter.
“With activity up but average deal size down, investors are becoming more democratic in their funding allocations and spreading capital more evenly among companies,” said Johnston. “This has resulted in a more sustainable insurtech market.”
Artificial intelligence plays key role in insurtech funding trends
Gallagher Re’s report also shared insights into insurtech funding trends within specific industry segments.
Funding for property & casualty insurtech dropped by 22.5% from Q4 2023 to Q1 2024. The number of deals also fell by six, according to the report.
As for the life & health segment, insurtech funding dropped slightly by 4.7%, but the number of deals increased by 54.2%.
Additionally, AI-focused insurtechs represented 28% of all deals during the quarter. They also saw a higher average deal size of $10.5 million compared to the overall average of $9.8 million.
Among these transactions, 16 out of 30 went to early-stage companies, with average deal sizes of $6.1 million. Gallagher Re said this was over $2 million more than non-AI-centered insurtechs.
In terms of investment sources, (re)insurers made 37 private technology investments in the quarter, down slightly from 41 in the previous quarter, but still up from 30 year-on-year.
The US also represented 54% of these investments, according to Gallagher Re.
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