Insurtech funding falls to 4Y low in Q1 on dearth of mega deals

Insurtech funding slid to its lowest level in four years, suffering from a complete dearth of major deals while attention shifted elsewhere toward early stage deals and firms with a focus in AI, analysts at global reinsurance brokerage Gallagher Re has declared. 

“Interest and activity do not seem to be slowing, but the average check size being written per deal is decreasing,” report author Andrew Johnston said. 

Q1 2024 funding deals at $912 million was neighbourhood 17% below levels in each of the last two quarters of 2023 and a tiny fraction of the Insurtech heyday of 2021 which had spilled into the following year. 

Mega deals above $100 million disappeared entirely to squash the Q1 tally, the first time the large-deal segment has been shut out since Q3 2017, authors noted. 

But early-stage deals flourished with $158 million in Q1 funding, the third best quarter for the segment on record, an extension of a trend in place at least since a burst of funding in Q2 2021. 

With mega deals absent and early-stage deals in full bloom, average deal sizes fell below $10 million for the first time since Q3 2017.  

AI-centered insurtechs raised $316 million, some 28% of the Q1 tally, including Q1's largest deal at $73 million for the AI-driven pricing platform Hyperexponential. 

Just over half the deals for AI-driven insurtechs went early stage, but secured deal sizes averaging $6 million, more than $2 million above the $3.8 million brought down on average by their early stage non-AI rivals, Gallagher Re claimed.

By segment, P&C insurtech funding fell by 22.5% q/q; life and health insurtech funding dropped by 4.7% q/q. 

Re/insurers continued to invest in insurtechs in Q1, securing 37 private technology investments, down from 41 in the previous quarter with the United States making up 54% of these investments.

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