P&C insurtech investment climbs 19% in Q3 as mega-rounds double
While the total number of P&C deals fell from 92 in Q2 to 89 in Q3 this year, P&C insurtechs obtained $1.2bn in mega-round funding in Q3, double that seen in the second quarter
Insurtechs in the P&C sector raised $1.77bn in the third quarter of 2022, with $1.2bn raised in mega-round funding, but there are warnings the sector has reached an ‘inflection point’
Investment in property/casualty (P&C) insurtechs increased nearly one-fifth in the third quarter of the year, driven by a doubling of mega-round funding, according to new data.
Funding for P&C insurtechs increased 18.8% to $1.77bn in the third quarter from $1.49bn in the second quarter of the year, Gallagher Re said it in its latest insurtech report.
While the total number of P&C deals fell from 92 to 89 quarter-on-quarter, P&C insurtechs obtained $1.2bn in mega-round funding in Q3, double that seen in the second quarter.
Mega-funding rounds included Berlin-based wefox’s $400m fundraising and $315m raised by Washington DC-based Pie Insurance.
At the other end of the spectrum, early-stage insurtech funding increased, with P&C deal volume up nearly 50% to $400m in the third quarter on the back of an increase in the number of deals.
Nevertheless, early-stage insurtech funding was still down year-on-year.
Across P&C and life and health, global insurtech investment came to $2.35bn in the third quarter, down 2.5% on the second quarter’s total, according to the Gallagher Re report.
The decline was attributable to a 37% quarter-on-quarter drop in life and health insurtech funding to $579m in the third quarter.
Overall, re/insurers made 24 investments in the quarter, pushing the market towards a three-year high for strategic funding in 2022 with a total of 85 investments this year to date.
MassMutual Ventures led corporate venture activity among re/insurers in the third quarter with six investments, according to Gallagher Re. Other carriers that made multiple investments in the quarter included Allianz X, Axa Venture Partners and SiriusPoint.
Andrew Johnston, global head of insurtech at Gallagher Re, said the insurtech sector had reached an “inflection point”, with a shift in investors’ focus from growth to profitability.
“Pressure is mounting on companies that sold the idea of endless growth to secure funds. The extent to which some founders truly believed they could grow their businesses (to the degree they were indicating) in our industry will always be a topic for discussion, but it seems very clear now the era of rushed growth for growth’s sake at the expense of profitability is coming to a close,” he said.
Johnston added “genuine” disruption has been extremely limited despite almost $50bn of global insurtech investment.
“Success has typically come only in areas where incumbents have been embraced and respected. Meanwhile, there’s increasing pressure on risk-originating insurtechs operating as managing general agents to begin partaking in the process of retaining risk, which in practice makes them more like incumbents,” Johnston said.
