Gallagher Re, a reinsurance broker, has released its latest InsurTech report, revealing that AI-focused InsurTechs raised $897.4 million across 29 deals in Q3 2024.
Eight of the top 10 companies by funding round were centred around artificial intelligence, resulting in an average deal size of $34.9 million for AI-driven InsurTech ventures.
The broader InsurTech sector showed impressive resilience and growth in the third quarter, with global funding totaling $1.38 billion.
This marks the highest funding level since Q1 2023, defying recent trends of fewer large-scale deals and a steadier average fundraising activity.
A notable 55.5% of the funding was directed into mega-round deals exceeding $100 million, reflecting continued industry support for large-scale technological advancements. However, the total number of deals in Q3 2024 dropped to 77, the lowest in nearly four years.
Artificial intelligence dominated the landscape, with nearly two-thirds (63.4%) of the deals centred on AI, highlighting its increasing prominence in the InsurTech space.
The majority of investments from re/insurers went toward mid-stage funding rounds, indicating a strategic preference for scaling existing technologies over backing early-stage ventures, the report revealed.
Funding for the Life & Health sector surged by 56.4% quarter-on-quarter, reaching $657 million. Conversely, funding for property & casualty (P&C) InsurTechs declined by 15.4%, falling to $722.16 million.
The average deal size in the sector increased from $18.46 million in Q2 2024 to $20.90 million in Q3 2024, boosted by five mega-round deals.
This marks the first time since Q3 2022 that the average deal size has surpassed $20 million. Reflecting the quarter’s emphasis on business operations, 42 out of the 77 InsurTech deals were focused on operational technology companies, which secured 81.4% of the total funding.
Overall, Q3 2024 has seen a resurgence in InsurTech funding, characterised by a more balanced distribution of capital, signalling the sector’s maturation and stabilisation.
This trend reflects growing confidence in the industry’s long-term prospects, with an increasing focus on sustainable growth and innovation.
The spotlight on AI-driven InsurTechs, mid-stage funding rounds, and operational companies underscores a strategic emphasis on scaling existing technologies and supporting large-scale advancements.
This evolving funding environment suggests a healthier, more sustainable future for the InsurTech sector, fostering broader industry growth and resilience.
“The third quarter of 2024 has not only seen a resurgence in InsurTech funding but also a shift towards a more even distribution of capital, reflecting a maturing and stabilising industry,” added Andrew Johnston, Gallagher Re InsurTech Global Head.
“This observation likely underscores the growing confidence in the sector’s long-term potential and the increasing emphasis on sustainable growth and innovation.”
