Insurtech Funding Plummets to Lowest Level Since 2018: Gallagher Re

Despite a 43.7% drop in global insurtech funding in 2023, U.S.-based insurtechs saw a 5.5% rise in deal share, indicating a maturing market.
By: | February 2, 2024

Global insurtech funding experienced a significant drop in 2023, falling from $8.0 billion in 2022 to $4.5 billion, the lowest level since 2018, according to Gallagher Re’s Global InsurTech Report.

This overall decline was propelled by a year-over-year decrease in both property & casualty (P&C) and life & health (L&H) insurtech funding, which fell 35.4% to $3.4 billion and 59.8% to $1.1 billion, respectively, the report stated.

The number of deals also saw a downward trend, with a decrease to 422 in 2023 from 521 in 2022. P&C insurtechs secured 316 deals, and L&H insurtechs, 106 deals, compared to 358 and 163, respectively, in 2022. The average deal size declined to $13 million in 2023 from $18.6 million in 2022.

Despite the overall decrease, U.S.-based insurtechs saw a 5.5% increase in global deal share between 2022 and 2023, the largest gain among all countries. The U.S. also led in activity with 216 deals in 2023, nearly seven times as many as the U.K., the next most active nation with 31 deals.

Mega-round funding, fundraising of $100 million or more, saw a significant decrease of $2.3 billion in 2023, a 70.1% year-on-year decline. However, Q4 accounted for 39.9% of all funding in mega-round deals, a six-quarter high, despite a historic low rate of mega-round participation as a relative percentage of total activity at 22%.

Andrew Johnston, global head of insurtech for Gallagher Re, noted, “Despite lower deal counts and funding, transactions were consistent and continued throughout 2023, indicating a mature and healthy market.” He suggested that 2023 could mark the beginning of a new phase involving a sustained change in investor behavior, with potentially smaller but not less frequent check sizes and less common mega-rounds.

Reinsurers showed increased interest in private technology investments in 2023, with a record 148 transactions, 12% higher than the previous record of 132 investments in 2019. Johnston emphasized the role of community acceptance in driving change, stating, “Once the value of a new technology is finally realized, its distribution, utilization and scaling can move extremely quickly.”

The Q4 2023 highlights revealed a slight 0.5% quarter-on-quarter increase in global insurtech funding, attributed to a 93.2% surge in L&H insurtech funding. However, P&C insurtech funding fell 16.1% quarter-on-quarter. The average insurtech deal size increased from $10.4 million in Q3 to $14.1 million in Q4, driven by the decline in deals coupled with steady funding levels. Mega-round deals as a share of total insurtech funding increased 21.7 percentage points quarter-on-quarter.

View the complete report from Gallagher Re. &

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

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