Insurtech funding plummets in Q1 2024

Global insurtech funding plummeted in Q1 2024 following a lack of mega-round deals, according to new research by Gallagher Re.

The firm’s Q1 Global Insurtech report highlighted that $912.3m (£729.74m) in funds were secured between January and March, 17% lower than the previous quarter.

Gallagher Re said this was the lowest quarter in four years.

The report also highlighted that average insurtech deal size fell below $10m (£7.99m) for the first time since Q3 2017.

However, deal count climbed to 107 in Q1 2024 from 100 in the previous quarter – indicating that frequency and interest are not waning, but the average check size per deal is decreasing.

“Since the insurtech investment peak in 2021, we have continued to see a funding reset,” said Andrew Johnston, global head of insurtech at Gallagher Re.

“With activity up but average deal size down, investors are becoming more democratic in their funding allocations and spreading capital more evenly among companies. This has resulted in a more sustainable insurtech market.”

AI-focus

This year, the report also had an artificial intelligence (AI) focus, with AI-focused insurtechs in Q1 2024 accounting for 28% of all deals.

Some 16 out of the 30 AI-focused insurtech deals went to early stage firms, with an average deal size of $6.1m (£4.88m).

Johnston added: “The focus on AI this year will help guide businesses through the daunting task of understanding the principles of AI, its various subcomponents and ultimately what advantages can be gained from its application.”