Insurtech Funding in Q1 Drops to Lowest Level Since 2020

Despite a drop in overall insurtech funding to $912 million, its lowest since Q1 2020, early-stage funding and AI-centered insurtechs are attracting investment, Gallagher Re observed.
By: | May 6, 2024
Topics: Insurtech | News
lower funding levels

Global insurtech funding totals fell to $912.25 million in the first quarter of 2024, the lowest level since Q1 2020, according to a report from Gallagher Re.

The number of deals increased slightly to 107 in Q1 from 100 in the fourth quarter, but the overall decline in funding was largely the result of no deals exceeding $100 million in the quarter for the first time since the third quarter of 2017, the report stated.

Despite the overall funding decline, early-stage insurtech funding increased by 26.5% in Q1 over Q4 2023, countering the broader trend.

Property & casualty (P&C) insurtech experienced their lowest funding since Q3 2018, raising $605.58 million in the first three months of 2024. The average deal size and number of deals also dropped in this sector, to $10.09 million and 70, respectively, due to a decline in the number of deals involving “lead generation, broker and MGA” insurtechs, Gallagher Re noted.

In contrast, life & health (L&H) insurtech funding remained relatively stable, with a slight decrease of 4.7% to $306.67 million. The number of L&H insurtech funding deals increased by 54.2%, although the average deal size in the first quarter decreased by 39.38% to $9.29 million.

Early-stage funding and deal count saw increases in both P&C and L&H insurtech sectors, with the average early-stage deal size rising from $4.43 million in Q4 2023 to $4.83 million in Q1 2024.

AI-centered insurtechs accounted for 28% of Q1 2024 deals, raising $316.06 million in funding. These companies saw average deal sizes more than $2 million larger than non-AI insurtechs for early-stage investments.

Distribution-focused insurtechs received the majority of deals in Q1 2024, with 54 out of 107 deals and a collective $528.22 million in funding. The average deal size for this group was $9.78 million, nearly equal to the overall insurtech average deal size. Embedded insurance and intermediaries were notable areas of focus within the distribution sector. However, only five of the 54 distribution-focused insurtechs were AI-centered.

Insurers and reinsurers made 37 tech investments in Q1 2024, with a focus on early-stage and U.S.-based companies.

“The industry continues to extract value from every dollar invested into technology and, at some point, we will hit the tipping point that truly justifies the journey we are on,” said Dr. Andrew Johnston, Global Head of Gallagher Re insurtech, emphasizing the necessity of technology adoption in the insurance industry. To date, approximately $55 billion has been invested in insurtech globally, and while the full value may not have been realized yet, the focus on profitability is expected to help drive the industry forward, the report stated.

To view the full report, visit Gallagher Re’s website. &

The R&I Editorial Team can be reached at [email protected].

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