According to Gallagher Re’s latest Global InsurTech Report, insurtech funding rebounded strongly in the first quarter of 2023, with global investments reaching $1.39 billion.
This represents a 37.6% increase over the previous quarter’s lowest total since the first quarter of 2020. While the number of deals remained constant, the average deal size increased by 25.3%, according to the global reinsurance broker.
Mega-round funding accounted for only 12.9% of total funding, the lowest level since the first quarter of 2020. P&C InsurTech funding drove the increase in quarterly investment, which increased by more than 53% to $967.89 million. L&H fundraising increased 9.6% to $420.73 million.
Despite the overall positive trend, early-stage L&H funding fell 44.3% from the previous quarter. Despite this, the average early-stage deal increased by 28% to $8.31 million. The majority of (re)insurance investments were made in early-stage rounds, a trend that has now been observed for six consecutive quarters.
According to the most recent funding totals, 2023 may mark a return to more ‘normal’ levels of gently rising InsurTech funding seen prior to the pandemic. In 2021, 62% of investments were made through mega-rounds, compared to 41% in 2022.
“2023 could mark the start of a new era for InsurTech.” The funding peak was undoubtedly reached in 2021, fueled by Covid-19 uncertainty and an organically occurring crescendo. The sector hit rock bottom in 2022, prompting major restructures, cost-cutting measures, and new business strategies. “A lot of businesses did not make it.” Gallagher Re’s Global Head of InsurTech, Dr Andrew Johnston, stated.
“Founders are now thinking about long-term sustainability and growth, realizing that their businesses will need to pull the plough themselves, reliant on their own capabilities and revenues,” Johnston added.
“A significant advantage appears to be a genuine willingness on the part of many (re)insurers, brokers, and agents to adopt technology.” As a result, the pressure is on InsurTechs to make their businesses more appealing and valuable.”