There is still an appetite for insurtech ventures and helping fast growing companies develop their products and market them globally. The latest report from Gallagher Re takes a look at the latest deals stats and trends. One fact stands out from the report; of the early insurtech companies from the boom years from 2012 onwards about one third no longer trade.
It’s still a risky business. Here’s the word;
As incumbent (re)insurers stepped-up their investment activity, new funding for the global InsurTech sector slipped to USD916.71 million during the second quarter of 2023, down 34.0% from USD1.39 billion in Q1 2023, pushing the quarterly total below USD1B for the first time in three years.
However, average deal size fell by a much smaller degree – 16.1% – to USD12.39M in Q2, across only 97 investments, according to the latest Global InsurTech Report from Gallagher Re, the global reinsurance broker.
Early-stage funding was its lowest since Q3 2017. L&H early-stage investments totaled just USD58.34M, while P&C early-stage funding slumped to USD157.71M. The average deal size for the sub-category slid to USD5.27M across 51 investments. Meanwhile, 17 “acceleration” category deals attracted USD134.49M, or 14.7% of total InsurTech funding for the quarter, a lower share than has been the norm. Only one Q2 deal qualified as a mega-round, Baring’s USD150M Series B investment in Accelerant, marking the third consecutive quarter with only one mega-round.
(Re)insurers made 43 InsurTech investments in Q2, most in early-stage deals including 12 seed investments and 14 Series A investments. Munich Re Ventures led the activity with six, while MassMutual Ventures made five and Aviva Ventures, MS&AD Ventures, and Nationwide Ventures each made three.
Dr Andrew Johnston, Global Head of InsurTech at Gallagher Re, said: “During InsurTech’s primary phase, from 2012 to 2021, about USD42B was invested. The focus was on technology, the “how” rather than the “what,” but up to a third of those InsurTechs no longer trade.
“InsurTech is now in a secondary phase focused on beneficial deliverables, rather than digital usurpation and quick cash. The whole InsurTech phenomenon instilled a new understanding of the importance of technology in our sector. Rapid and accelerating adoption by incumbent insurers has created a huge opportunity for InsurTechs to support incumbents through technological innovation. Those presenting clear commercial outcomes for themselves and their clients will benefit from investors’ more realistic sense of what can be achieved.”