Insurtech funding plummets to lowest level since 2018

Global Insurtech funding plummeted from £6.3bn in 2022 to £3.58bn in 2023 for quarter four (Q4), new figures from Gallagher Re have revealed.

This 43.7% drop, which was highlighted in the firm’s Global Insurtech Report, was the lowest level seen since 2018.

The slump was driven by a year-on-year decrease in funding across the property and casualty (P&C) sector, as well as in life and health insurtech (L&H) businesses.

P&C funding fell by 35.4% to £3.50bn, while L&H capital dropped by 59.8% to £88m.

In line with a drop in funding, deal count declined from 521 in 2022 to 422 in 2023.  

Average deal size sat at £10.35m last year, down from £14.33m in 2022.

Healthy market?

Despite this, Andrew Johnston, Gallagher Re global head of insurtech, told Insurance Times that there were signs ”indicating a mature and healthy market”.

“I encourage people to look at the relative drop in deal count, relative to the total amount invested, and you’ll see that the drop in deal count is nowhere near as significant,” he said.

Gallagher Re’s figures noted that deals valued at more than £3.98bn within the insurtech space increased by 21.7 percentage points quarter-on-quarter.

It also highlighted that 2023 saw an increased interest in private technology investments by reinsurers, with a record 148 transactions taking place, some 12% higher than the previous record of 132 investments in 2019.

Johnston said this was a “very healthy sign”.

“As we have noted in the past – the innovation is not what actually drives change, it is the community coming out and accepting the innovation that ultimately makes the impact,” he added.

“Once the value of a new technology is finally realised, its distribution, utilisation and scaling can move extremely quickly. It is this second part of the equation that can bring our expectations full circle – back into line with the enthusiasm of a technology’s early advocates.”