Gallagher Re reports 37.6% rise in insurtech investment

Investment up despite big deal slump
Reinsurance broker Gallagher Re has reported a 37.6% rise in insurtech funding for the first quarter of 2023, with ‘mega-round’ funding only accounting for 12.9% of total investment in the quarter.
Insurtech investment in Q1 2023 rose to $1.39bn, up from $1.01bn in the prior quarter (Q4 2022). This increase in investment comes somewhat as a surprise, given high funding rounds in insurtechs were at their lowest point since Q1 2020.
The majority (37.7%) of funding in Q1 2023 was attributed to ‘early-stage incubation’ investment by Gallagher Re. Among the early-stage investors were legacy insurers and reinsurers, preferring small-scale investment for the sixth consecutive quarter. Gallagher Re’s term (early-stage) refers to any pre-Series A funding.
A surge in P&C funding
With large-scale investment at its lowest level in recent years, Gallagher Re has attributed this funding growth to a surge in P&C insurtech funding. Total P&C funding reached $967.89mn for Q1 2023, up 53% from the previous quarter.
Furthermore, while there was a glut in large investments, funding for P&C-focused insurtechs grew by 31%. The average P&C deal size in Q4 2022 stood at $10.86mn; in Q1 2023 it was $14.23mn. The growth rate of P&C funding stood above the average investment size increase across the board, which was 25.3% quarter-to-quarter.
Investment in P&C insurtechs was not the only industry vertical that saw funding growth according to Gallagher Re, with L&H insurtech funding growing 9.6% quarterly from $383.76mn in Q4 2022 to $420.73mn in Q1 2023.
Early stage investment
Despite the investment growth seen in L&H insurtechs, early-stage funding in the sector was down 44% from Q4 2022, per Gallagher Re’s data.
This goes very much against the grain of an uptick in early-stage insurtech investment. Unlike L&H, early-stage P&C insurtech funding didn’t cough up any nasty surprises. In fact, it doubled quarter-on-quarter from $4.63mn in Q4 2022 to $8.46mn in Q1 2023.
Takeaway…
Despite the various investment dips in certain segments of the insurtech industry, the overall picture is a positive one, given the recent dip in funding over the last year. While there are fewer large-scale investments compared to 2021, the steady stream of funding seen at the start of 2023 reflects a stable insurtech investment market.
Featured Articles
West Virginia insurer FMIWV adopts artificial intelligence to enhance property underwriting accuracy and reduce costs using data-driven approach
Veteran insurance executive to take helm at Lloyds of London as it seeks to build on recent financial turnaround
Clearwater has expanded its capabilities through the strategic purchase of Beacon, aiming to unify front-to-back office processes for institutional client