At $1.01 billion, global InsurTech investment fell in the fourth quarter of 2022 to its lowest quarterly level since the first quarter of 2020 and declined 57.0% from the third quarter of 2022, according to the Global InsurTech Report from global reinsurance broker Gallagher Re.

“At the end of 2019, we estimated the total number of InsurTech businesses globally at 3,000, but now only about 2,050 are actively open for business,” said Dr. Andrew Johnston, global head of InsurTech at Gallagher Re, in a company press release. “Meanwhile, venture capitalists are focused on profitability and well-understood KPIs. Capital is available, but investment dropped dramatically in 2022 from 2021, with 2021 arguably marking the ‘peak of expectations.’ The most significant feature of 2022 is that the narrative around ‘disruption’ seems to be truly over.”

InsurTech funding in property/casualty for the fourth quarter of 2022 slumped 64.4% to $630.16 million, while total Q4 investments in life and health fell 33.7% to $383.76 million. Average deal size across 106 rounds declined 42.3% to $11.79 million. The performance drove annual total funding for 2022 down by 49.5% from 2021 to $7.98 billion. Notably, InsurTechs attracted $6.51 billion less in mega-round funding – a 66.7% year-on-year drop.

Early-stage funding declined less dramatically, falling 25.1% quarter-on-quarter to $408.27 million in Q4, driven by a 51.3% drop in early-stage property/casualty funding over 50 deals averaging $4.63 million.

Despite the trends, early-stage life and health funding actually increased in Q4 by 46.5% to $213.64 million, driven by four deals greater than $40 million. The figures underlie a year of macro-realism for individual InsurTechs and micro-hardship for investors in the sector, the report observed.

A small number of individual businesses have done well, however, according to Dr Johnston.

“2022 has prompted an exodus of third-party capital providers, causing the sector to refocus on the real prize: wider adoption of appropriate technology to make the entire process of insurance more efficient, cost effective, and less complex leading to an improved customer experience,” he said in the release.

The top seven recipient countries for InsurTech investment in 2022 were the U.S., the U.K., Germany, France, India, Israel, and Australia, all of which topped $200 million. U.S. companies, at $4 billion, received 35% more investment than the next six countries combined.

Source: Gallagher Re