Insurtech funding falls 45% to date in 2023, now at 21 quarter-low

Venture capital funding in insurance sector tech start-ups or insurtechs has fallen to levels not seen since 2018, with $2.4 billion in the first half of 2023, down 45% year on year, a report by key industry players has shown.

“The funding environment has toughened, but early stage funding and some leading private players show that opportunities still exist for quality startups,” the report by Dealroom.co, Mundi Ventures, MAPFRE, NN Group, and Generali shows.

A $1.0 billion tally in the second quarter is now the lowest quarterly sum since Q1 2018. the dataset indicates. The market has seen individual quarters with tallies above $4 billion as recently as 2021.

“Although investment has cooled across the VC landscape in general, 'good' start-ups are continuing to close significant fundraising rounds,” Mapfre's global head of transformation Joan Cuscó said.

The pullback has been mostly in late stage funding, down over 60% from its peak. Early stage funding is down by a notable, but milder, 30%.

Insurtechs are taking disproportionately low funding compared to mobility and fintech sectors. Financial services take ten times the funding for being only twice as large. Mobility is smaller than insurtechs, but takes five times more VC funding.

And life insurers are even on the short-end of the insurtech stick, having been "particularly underinvested and still awaiting for much needed change." P&C took 40% of insurtech VC funding 7 years ago but over 60% today.

But insurtechs are not suffering a disproportionate drop versus other venture capital targets. The 45% decline for insurtech funding in H1 compares favourably toa 51% decline in overall VC funding.

Insurtech startups are now worth $281 billion after a strong 59% downward correction for publicly listed insurtechs offset by the relative stability of privately held firms.

“The persistently high uncertainty is jeopardizing trust, a fundamental element for any investment with a medium-long term horizon – and Venture Capital is no exception,” Generali's group head of business development and innovation Stefano Bison said.

“All KPIs are pointing towards the fact that it has been a harsh run so far, and we are far away from the end.”

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.