Insurtech funding boosted by mega deals in latest quarter

8 August 2022

Global insurtech investment rose 8% to $US2.41 billion ($3.49 billion) in the second quarter, up 8% from the previous quarter but only half 2021’s bumper second quarter.

Average deal size was up 18% to $22.11 million while total deal numbers fell to 132, from 143 in the first quarter, reflecting the dominance of six mega-rounds which raised $US948 million ($1.37 billion) collectively, Gallagher Re’s Global InsurTech Report says.

Global Head of Insurtech Andrew Johnston says insurtechs set to deliver growth and profitability over the long-term present confident investors with an excellent opportunity to diversify their portfolios.

“A number of them will undoubtedly change the face of our industry, or parts of it, and in some cases are already doing so,” he said. “As markets begin to recover, those insurtechs should rise to the surface with the utmost buoyancy.”

The quarterly investment rebound comes after insurtech funding dropped 58% in January-March from the last three months of 2021. A year ago, April-June insurtech funding hit $US4.84 billion ($7.01 billion).

A recent downgrade of company values could trigger unexpected mergers and divestitures, Mr Johnston says, and has “thrown cold water over many other insurtechs that previously considered themselves special or unique”. Some investors and insurtechs should make acquisitions, he says, adding “this moment could be seen as an enormous opportunity”.

San Francisco-based Newfront Insurance, a technology-powered commercial insurance brokerage, raised $US200 million ($289.6 million) in Series D funding in April – the largest deal for the quarter.