Are insurtech numbers climbing again?

Global insurtech funding rose 39.7% quarter-on-quarter, a new report shows. 

The upward swing is attributable to a near doubling of average deal sizes, finds Gallagher Re’s Global InsurTech Report Q2 2024. Specifically, funding to property and casualty (P&C) insurtechs grew 41.0%. 

Yet, global insurtech deals tallied 82 in Q2 of 2024 — the lowest quarterly count since 74 were tallied four years ago in 2020 Q2. And the P&C deal count dropped from 70 to 54 globally. 

Comparatively, there were 107 total deals in the previous quarter. 

Is this quarter’s upward swing enough to reverse course for the last few years’ worth of insurtech trends? At the end of 2023, insurtech funding had slumped 43.7% year over year, according to a previous Gallagher Re report. 

“For this quarter at least, the tide has turned and InsurTech numbers have climbed back up,” the current report reads.  

Q1 data showed, despite a downturn in global insurtech investments, “there was still a clear industry-wide focus on supporting technology businesses,” Gallagher Re writes.  

“In Q1 specifically, while the cash valuations of insurtechs seemed to be down, the increased number of transactions and the fact that more deals were being done by funds associated with (re)insurers suggest the industry still has a keen interest in tech.” 

In Q1, there were only a small number of mega-round deals, which Gallagher says will continue. “[We] can see this trend continuing — deal-sizes are clustering around the mean. We observed only one mega-round deal in Q2 meaning only one for the whole half.” 

Four per cent of overall Q2 transactions were made in Canada (approximately three deals). And between 2012 and 2024, deals in Canada made up 2% of global insurtech transactions. 

 

Who’s getting deals? 

There’s a trend in what types of insurtechs are getting deals — AI-centered insurtechs (totalling one-third of deals) and risk-focused insurtechs (totalling two-fifths of deals). 

“That said, these deals were smaller in size on average than companies not focused on AI,” the report said.  

Interestingly, this is the reverse of Q1, where AI insurtechs raised an average of 20% more capital than their peers. 

Between 2012 and 2024, approximately 16% of all capital invested in insurtechs has gone into AI insurtechs — approximately US$9.6 billion in total. 

But risk-focused insurtechs (those focused on risk origination, or pricing, underwriting and portfolio optimization support) are also on the up and up. Four of the top five deals this quarter went to risk-focused insurtechs, according to Gallagher Re.

 

Feature image by iStock.com/oatawa