Gallagher Re reports 37.6% rise in insurtech investment

Gallagher Re has reported a 37.6% rise in insurtech funding during Q1 2023 despite a slump in the rate of large-scale investments

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.

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