From the “drought” in dealmaking to another solid year for early-stage firms, CBInsights has shared industry trends that are now transforming the global Insurtech sector.
The research study from CBInsights notes that during the past year, investors continued to move away from Insurtech firms.
According to the update, there were only 113 investors that made at least two equity insurtech investments during the year — which represents a “72% drop from the high of 406 investors in 2021.”
As a result of this significant momentum shift, Insurtech dealmaking dropped to 362 deals, which is said to be the lowest annual total since 2016.
The report further revealed that Insurtech deal count fell “28% YoY, from 500 deals in 2023.”
Key takeaways from the CBInsights report include:
- Insurtech dealmaking and funding continue to decline. Deal count fell 28% YoY to 362 deals in 2024, while funding dropped 4% to $4.5B. Insurtech deals and funding are both at recent lows.
- Quarterly funding to P&C insurtechs is in the gutter. P&C funding dropped 43% quarter-over-quarter (QoQ) to $0.4B in Q4’24 — a 7-year low — with annual funding also declining to $2.6B.
- Silicon Valley is dethroned as insurtech’s funding capital. Silicon Valley’s share of global insurtech funding dropped from 20% in 2023 to 10% in 2024, surpassed by New York at 15%. This was the first time since 2018 that Silicon Valley wasn’t No. 1.
- Early-stage insurtechs raise record-high deal sizes. The median early-stage insurtech deal size surged 52% YoY to $3.8M in 2024 — outpacing the broader venture landscape — as investors concentrate on a more selective group of innovators.
While investments may have slowed considerably during the past year, the report states that funded Insurtechs show “stronger business fundamentals and more efficient growth trajectories.”
The report from CBInsights added that insurtechs that raised funding in 2024 have increased employee headcounts by “a median of 20% over the last 12 months, surpassing the 3% growth among those that raised during the funding boom of 2021.”
As stated in the report from CBInsights, the decline has outpaced the wider venture environment, which saw deal count decline “19% YoY. 2024 was the worst year for insurtech dealmaking since 2016 (328 deals).”
Deal volume among major investors has also decreased, the report noted.
The research report from CBInsights further revealed that the number of investors that made “5 or more equity insurtech investments has fallen from 57 in 2021 to just 7 in 2024.”
The update also mentioned that those which remain active now operate in a more “favorable environment due to reduced competition across the marketplace.”
Notably, CBInsights pointed out that Q4’24 marked a “7-year low” for P&C insurtech funding, which declined “43% QoQ to $0.4B.”
The decline caused broader insurtech funding “to halve QoQ, from $1.4B in Q3’24 to $0.7B in Q4’24.”
The report added that P&C deal count also fell “10% QoQ to 45 in Q4’24, the lowest level since Q2’16.”
Annual P&C insurtech funding declined to “$2.6B in 2024, a 7-year low, underscored by just 2 P&C insurtech startups raising $100M+ mega-round deals: Altana AI, which offers an AI-powered supply chain risk platform, and Akur8, an AI-powered pricing platform.”
Those deals indicate demand for specialized AI products for the insurance industry, “coinciding with a global surge in AI funding to over $100B last year.”
Meanwhile, life and health-focused insurtech initiatives saw an “increase in annual funding and dealmaking.”
The research report from CBInsights added that funding has reportedly increased “64% YoY to $1.8B in 2024, while deals ticked up from 126 in 2023 to 128 in 2024.”
The report added that the share of global insurtech funding to Silicon Valley-based startups has now halved YoY, “falling from 20% in 2023 to 10% in 2024.”
In comparison, New York led the way with “15% of global insurtech funding share in 2024, more than doubling from 7% the year prior.”
Silicon Valley is widely considered as the global tech ecosystem, and venture-wide funding to the region’s startups “soared last year amid a boom in AI investment.”
Given the ecosystem’s relevance, significantly diminished insurtech activity in Silicon Valley could “lead to missed opportunities for insurance-focused AI advancements.”
The median insurtech deal size increased from “$4.1M in 2023 to $5.2M in 2024.”
The increase was fueled by early-stage insurtechs, which “saw median deal size surge 52% YoY, from $2.5M in 2023 to $3.8M in 2024.”
The size and growth rate reportedly “beat out the broader venture environment, where early-stage deal size increased 17% YoY to $2.1M.”
Combined with the decline in dealmaking, “larger check sizes indicate that investors are concentrating their investments on fewer bets.”
For the insurance industry, this dynamic points to “a slimmer insurtech landscape with fewer high-growth participants moving forward.”
Meanwhile, late-stage insurtech deal sizes fell “19% YoY from $40M in 2023 to $32.5M in 2024.”
The decline coincides with a “restricted exit environment: Insurtech M&A exits fell from 57 in 2023 to 35 in 2024.”
Despite this, some of the noteworthy exits include the following: CCC Intelligent Solutions’s acquisition of EvolutionIQ in December at “a valuation of $730M,” as well as Applied’s purchase of Planck in July.
Both acquisitions targeted genAI-enabled startups, which is said to be signaling “a broader appetite for genAI insurance offerings.”
Insurtechs that raised funding last year are said to be “growing headcounts faster than other insurtechs, by a median of 20% over the last 12 months and 40% over the last 24 months.”
In comparison, median headcount growth among insurtech firms that had raised a funding round at the “height of the funding boom in 2021 is marginal — just 3% over the last 12 months.”
The report pointed out that higher growth rates of recently funded insurtechs suggest “a new breed of companies with stronger fundamentals — they’re not only able to raise capital in a selective market but are also demonstrating more efficient growth than their 2021-funded counterparts.”
CBInsights has concluded in the comprehensive Insurtech industry report that investors and partners should monitor the landscape for “outliers that represent organic growth opportunities — such as insurtechs that haven’t raised funding in several years but continue to grow headcount at a steady clip.”