Insurtech enters ‘new era’ with big surge in funding: Gallagher Re

Global insurtech investment rose to $1.39 billion in the first quarter of 2023, marking a return to pre-pandemic funding levels after a reset last year, according to a new report from  Gallagher Re.

Gallagher’s Global Insurtech Report reveals that the total investment in Q1 was up 37.6% from the fourth quarter of 2022. While deal count remained steady, average deal size rose by 25.3%.

P&C insurtech funding rose by 53%, driving the increase in investment, as it surged by more than 53% to $967.89 million. L&H fundraising rose by 9.6%.

The majority of investments by re/insurers went into early-stage rounds, a trend now observed for six consecutive quarters.

The report suggests that the insurtech sector is undergoing a “reset” and companies are focusing on long-term sustainability and growth.

Mega-round funding accounted for only 12.9% of the total, the lowest since the 2020 Q1 dip, according to the report.

Andrew Johnston, global head of insurtech at Gallagher Re, said that 2023 could mark the beginning of a new era for insurtech. “2021 undoubtedly marked the funding peak, fuelled by Covid-19 uncertainty and an organically occurring crescendo. The sector came back down to earth in 2022, leading to some serious restructures, cost-saving actions, and new business strategies. A lot of companies did not make it through,” he said.

“Founders are now thinking about long-term sustainability and growth, and realising their businesses will need to pull the plough themselves, reliant on their own capabilities and revenues.

“A significant upside seems to be the genuine willingness of many (re)insurers, brokers, and agents to adopt technology. The pressure is therefore on InsurTechs to make their businesses palatable and value-adding,” he added.

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