Global insurtech funding has dropped 43.7% from $8bn in 2022 to $4.5bn in 2023, the lower level since 2018.

In addition, deal count dropped year-on-year from 521 in 2022 to 422 in 2023.

This is according to the Global Insurtech Report from global reinsurance broker Gallagher Re, which also found that the slump in funding was driven by a year-on-year decrease in funding both P&C and L&H insurtech. P&C feel 35.4% to $3.4bn and L&H dropped 59.8% to $1.1bn.

However, while year-on-year deals were down, global deal share among US-based insurtechs actually rose by 5.5% between 2022 and 2023, the largest gain among all countries. The US was also the most active in terms of deals in 2023 with 216, greatly in front of the UK, in second place, with 31 deals.

“Despite lower deal counts and funding, transactions were consistent and continued throughout 2023, indicating a mature and healthy market,” said Andrew Johnston, global head of insurtech at Gallagher Re.

He added: “Whereas 2021 was the peak of the market, and described as the first phase of the InsurTech investment or the ‘Great Experiment’, 2023 could be viewed as the beginning of a new phase involving a sustained change in investor behavior. Will check sizes be smaller but not less frequent? Will mega-rounds become less common? Will the overall flow of deal activity continue? Time will tell, and we may one day reflect that 2023 was an overcorrection, and potentially itself an anomaly.”

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“As we have noted in the past – the innovation is not what actually drives change, it is the community coming out and accepting the innovation that ultimately makes the impact,” Johnston continued. “Once the value of a new technology is finally realised, its distribution, utilisation and scaling can move extremely quickly. It is this second part of the equation that can bring our expectations full circle – back into line with the enthusiasm of a technology’s early advocates.”