Global Insurtech Funding Stable: Gallagher Re

Investment in the global insurtech-sector in Q3 2022 was $2.35 billion.

Source: Reinsurance News | Published on November 1, 2022

Insurance technology (Insurtech) concept. Inscription on a virtual screen.

According to new data from re/insurance broker Gallagher Re, $2.35 billion in global insurtech-sector investment was made in Q3 2022, indicating a “inflection point” for the space.

Although investment was down 2.5% from the previous quarter, Gallagher Re notes that the headline figure masks some significant dynamics, including a 48.1% increase in early-stage funding, driven by the second-highest quarterly number of seed-funding deals ever.

On the other end of the spectrum, P&C insurtechs raised $1.2 billion in mega-round funding through investments of $100 million or more, more than doubling the amount raised in Q2.

Despite the mega-rounds, average deal size fell 7.6% in Q3 to $20.42 million, reflecting the volume of early-stage funding, while total deal count increased 6.1% to 140.

This effect was most pronounced in L&H funding, which fell from $917.85 million in Q2 to $579.19 million in Q3, with deal size falling 38.6% to $15.24 million in Q3, averaged across 51 deals, according to Gallagher Re.

Total funding for P&C InsurTechs increased 18.8% to $1.77 billion, with 24 investments from re/insurers, pushing the market to a three-year high for strategic funding in 2022.

“Third-quarter investments this year were made at a critical juncture for the global InsurTech sector,” said Andrew Johnston, Gallagher Re’s Global Head of InsurTech.

“Pressure is mounting on companies that sold the concept of infinite growth in order to secure funds.” The extent to which some founders truly believed they could grow their businesses (to the extent they indicated) in our industry will always be a point of contention, but it appears very clear now that the era of rushed growth for the sake of growth is coming to an end,” Johnston continued.

“Hubristic rhetoric around ‘disruption’ is fading in tandem with the growing recognition that profitable carriers (no matter how ‘outdated’), intermediaries, and traditional markets must be supported, not displaced,” he added.

“Despite nearly $50 billion in global InsurTech investment, genuine disruption has been extremely limited.” Only in areas where incumbents have been embraced and respected has success occurred. Meanwhile, there is increasing pressure on risk-originating InsurTechs operating as MGAs to start participating in the risk retention process, which effectively makes them more like incumbents.”