Global Insurtech Funding Falls Below $1 Billion in Q1 2024 | Insurance business America
Decline due to decline in large deals, says Gallagher Re
technology
By Mika Pangilinan
According to Gallagher Re, global insurtech funding fell below the billion-dollar mark in the first quarter of 2024 due to a lack of large deals.
In a new report, the global reinsurance broker revealed that insurtech funding totaled just $912.3 million in the first quarter of the year. This is a 17.3% decline from the previous quarter, making the first quarter of 2024 the lowest period for global insurtech funding in four years.
Andrew Johnston, global head of insurtech at Gallagher Re, said the market had continued to see a “financing reboot” since the peak of insurtech investment in 2021.
The report highlighted a decline in the average size of insurtech deals, falling below $10 million for the first time since the third quarter of 2017.
Despite the decline in deal size, the number of insurtech deals increased to 107 from 100 in the previous quarter. Early-stage financing also increased by 26.5% compared to the previous quarter.
“As activity increases but average deal size decreases, investors are becoming more democratic in allocating their funds and distributing capital more evenly across companies,” Johnston said. “This has led to a more sustainable insurtech market.”
Artificial intelligence plays a key role in insurtech financing trends
Gallagher Re’s report also provided insights into insurtech funding trends across specific industry segments.
Funding for property and casualty insurance technology fell 22.5% from the fourth quarter of 2023 to the first quarter of 2024. According to the report, the number of deals also fell by six.
In the life and health segment, insurtech financing fell slightly by 4.7%, but the number of deals increased by 54.2%.
Additionally, AI-focused insurtechs accounted for 28% of all transactions in the quarter. They also recorded a higher average deal size of $10.5 million compared to the overall average of $9.8 million.
Of these deals, 16 out of 30 were to early-stage companies with an average deal size of $6.1 million. Gallagher Re said that was over $2 million more than non-AI 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 accounted for 54% of these investments, according to Gallagher Re.
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2024-05-03 12:01:17
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