AI focused firms secured majority of insurtech funding in Q3 2024 – Gallagher Re

Artificial intelligence (AI) focused insurtechs dominated the third quarter (Q3) of 2024 in terms of funding, with 63% of the total allocated to this grouping according to the latest report findings from Gallagher Re.

The reinsurance broker’s Global insurtech report, published last week (7 November 2024), revealed that  £668.80m ($867.4m) in funding went to AI focused insurtechs, spread across 29 deals during the quarter.

Most of these technology investments were made by (re)insurers and directed towards mid stage funding rounds, demonstrating a strategic focus on scaling existing innovations as opposed to early stage ventures.

Meanwhile, eight of the top 10 companies by funding round size were AI focused, with an average deal size of £26.91m ($34.9m).

Andrew Johnston, insurtech global head at Gallagher Re, said: “Through this year’s focus on AI, our intention has been to help businesses understand AI’s core principles, various subfields and the advantages of effective implementation, ultimately enabling [firms] to enhance operational efficiency, improve risk management and drive innovation in the insurance industry.”

Gallagher Re’s insurtech report series has focused on the role of AI in (re)insurance this year, with each quarter exploring where AI can add value in the areas of distribution, risk, central business operations and claims.

Funding resurgence

Insurtech funding also improved quarter-on-quarter, reaching £1.06bn ($1.38bn) in Q3 to mark the highest level of funding since Q1 2023.

Gallagher Re’s report found that 55.5% of insurtech funding across the quarter was funnelled into mega round deals exceeding £77.08m ($100m), highlighting the industry’s continued support for large scale technological innovation.

Johnston continued: “[Q3] of 2024 has not only seen a resurgence in insurtech funding but, also a shift towards a more even distribution of capital, reflecting a maturing and stabilising industry.”

Despite an increase in funding, the number of deals struck in Q3 2024 dropped to 77, which was the lowest amount in nearly four years.

The average deal size in the insurtech space increased from £14.23m ($18.46m) in Q2 2024 to £16.11m ($20.90m) in Q3 2024, due to the weighting of five mega round deals.

This marked the first time since Q3 2022 that average deal sizes have exceeded the £15.42m ($20m) mark.

• Insurance Times has converted dollar amounts into pound sterling at an exchange rate of £1 = $1.29, as at November 2024.