Insurtech Funding Trends and Industry Outlook for Q1 2024

Insurtech funding has seen a decline in Q1 2024, but industry stakeholders are not overly concerned. Joel Albarella, Head of NYL Ventures, described it as a “healthy reset” that will benefit the industry as a whole. Chase Allen, SVP of Quility B2B, added that insurtech is entering a more mature phase, which is positive for everyone, including consumers.

According to Gallagher Re’s Global InsurTech Report for Q1 2024, insurtech funding has reached record lows. Global funding fell to USD $912.25 million, down 17.3% from the previous quarter. This marks the lowest levels since Q1 2020, with no mega-round deals over USD $100 million. Despite the decline, industry experts believe that the sector’s future investment potential remains strong.

The decrease in investment can be attributed to investors focusing more on return on investments rather than insurtech’s novelty and potential. Albarella noted that the industry is moving towards a more practical and collaborative phase, shifting from disruption to partnership with traditional insurance players.

One area where insurtech has shown resilience is in artificial intelligence (AI). AI-centered insurtechs raised USD $316.06 million in funding in Q1 2024, with 28% of deals going to AI-focused companies. Stakeholders are optimistic about the potential of AI investments in insurtech, as it can enhance various aspects of the insurance process.

Overall, while insurtech funding has declined, industry experts see this as a positive development. The sector is undergoing a “healthy reset” after periods of unsustainable funding levels. As the market matures, the focus is shifting towards practical solutions and collaboration with traditional insurance players. AI investments continue to show promise, offering opportunities for innovation and efficiency in the industry.

In conclusion, despite the decline in funding, insurtech remains a dynamic and evolving sector with potential for growth and innovation. Stakeholders are optimistic about the future of the industry, emphasizing the importance of practical solutions and collaboration in driving its development.