PitchBook’s latest research reveals a complex landscape for insurance technology (insurtech) venture funding in 2024, marked by a contraction in total investment but persistent investor interest and soaring valuations.
In Q4 2024, PitchBook noted that deal value plummeted 42% quarter-over-quarter, dropping from $1.9 billion in Q3 to $1.1 billion, despite a modest 3.7% uptick in deal count from 109 to 113.
For the full year, the research report from PitchBook pointed out that insurtech venture capital (VC) funding totaled $5.1 billion across 446 deals—down from $5.8 billion over 530 deals in 2023.
According to the analysis from PitchBook, this pullback, evident since the sector’s 2021 peak, reflects a more cautious and selective investment climate amid macroeconomic challenges like rising interest rates and shifting underwriting cycles.
Yet, the data underscores insurtech’s resilience, with both incumbents and venture investors continuing to back innovations in distribution, policy administration, and claims processing.
PitchBook pointed out in its report that the decline in funding is viewed as a market reset rather than a collapse.
PitchBook analysts suggest that as the first wave of publicly traded insurtech firms stabilizes, this contraction could clear the path for a new generation of startups.
These emerging companies are expected to focus on enhancing the insurance value chain—through advanced underwriting models, claims automation, and embedded distribution—rather than directly challenging established players.
As stated in the report from PitchBook, Q4’s funding concentrated on such innovations, with standout deals like Iceye’s $158 million venture-growth round for satellite-based disaster response analytics and bolttech’s $112 million Series C for its embedded insurance platform, led by BlackRock and Dragon Fund, respectively.
Valuations across all funding stages surged in 2024, signaling strong investor confidence in the sector’s long-term potential.
PitchBook further noted that pre-seed/seed median pre-money valuations rose 27.4% year-over-year, from $8.8 million to $11.3 million, while early-stage valuations soared 84.4%, from $22.8 million to $42 million.
Late-stage valuations reportedly climbed 44.8%, reaching $57.3 million from $39.5 million.
Deal sizes followed suit: pre-seed/seed checks grew 37.3% to $2.5 million, early-stage medians more than doubled to $7 million (up 113.5%), and late-stage deals rose a more tempered 22.2% to $10.8 million.
This valuation boom, particularly in technologies enhancing underwriting efficiency and risk analytics, reflects aggressive investor pursuit of disruptive solutions, though late-stage moderation hints at a focus on strategic scaling amid public market volatility.
Exit activity, however, remained fairly subdued. Q4 saw seven exits, down from eight in Q3, with full-year values lagging behind 2021’s highs due to tighter conditions and conservative valuations.
Acquisitions leaned toward strategic buyers bolstering existing capabilities rather than absorbing competitors, signaling a maturing market prioritizing integration over consolidation.
Looking to 2025, the PitchBook research team anticipates further consolidation among underwriters, carriers, and software providers, alongside sustained investor focus on next-generation analytics, embedded insurance, and AI-driven risk assessment.
While 2024 funding fell short of prior peaks, the combination of steady deal flow and robust valuation growth suggests insurtech is gradually adapting to a challenging environment.
The sector’s ability to attract substantial capital despite headwinds—coupled with its shift toward value-enhancing innovation—positions it for sustained expansion.
PitchBook concluded in the latest research report that as macroeconomic uncertainty persists, insurtech remains a fairly competitive ecosystem where resilience and strategic focus could drive the next wave of growth.