AI-centered businesses make up quarter of Q1 insurtech deals

More than one-fourth of first-quarter insurtech deals involved AI-centered businesses as overall insurtech funding declined 34.3% from first-quarter 2023 to $912.3 million, according to a report Thursday from Gallagher Re, the reinsurance business of Arthur J. Gallagher & Co.

AI-centered insurtechs raised $316.1 million, accounting for 28% of total first-quarter funding. This included the largest deal of the quarter, a $73 million Series B effort by Hyperexponential, a pricing platform that leverages machine learning, the report said.

Distribution dominated the fundraising, with 54 of the 107 first-quarter insurtech deals going to “distribution-focused” insurtechs raising a collective $528.2 million.

Property/casualty insurtech funding fell 22.45% quarter over quarter, to $605.6 million in the first quarter, as the average property/casualty insurtech deal size declined to $10.1 million and the number of property/casualty insurtech deals dropped by six quarter over quarter to 70.

The U.S. continued to dominate funding, garnering 51% of first quarter transactions, with the U.K. a distant second with 9% of deals, report data showed.

Andrew Johnston, global head of insurtech for Gallagher Re, said artificial intelligence holds great promise for the insurance industry. “I genuinely believe that there is going to be a huge amount of value added to the industry from this technology,” he said.