Global insurtech funding reaches $3.2bn in Q3, expected to reach $4.2bn by the end of 2024

The third quarter of 2024 closed with an investment in insurance technology (Insurtech) of $3.2 billion, 7% less than in 2023, however, this trend appears to be a positive and suggests a rebound in funding in the fourth quarter, according to a new report by Dealroom.co, Mundi Ventures, and MAPFRE.

Venture capital funding in insurtech start-ups is beginning to see signals of stabilisation, which has primarily been driven by the breakout-stages start-ups (ones that are in Series B and C founding stages).

In fact, it is expected to reach $4.2 billion by the end of 2024,which is similar to the figures seen in 2018 and 2023.

According to the report, late-stage start-ups – those seeking funding rounds of over $100 million – are experiencing the greatest decline, with a drop of nearly 90% compared to their 2021 peak.

Nonetheless, the report explains that these will ultimately drive the final funding push before closing 2024, as many have been working on reinforcing their unit economics to be ready for the exit in the upcoming years.

Breaking it down by region, the United States continues to be the main driver of growth, with an investment of $1.8 billion. Following behind is Europe with $1.1 billion. Both regions appear to be showing fairly positive performance, and the trend indicates they will continue this way.

On the other hand, emerging markets like Latin America are struggling more to attract investors, remaining at historical lows with $37.1 million in funding. Importantly though, the insurance penetration gap is gradually narrowing on the continent, so growth prospects remain optimistic.

Furthermore, the report shows that companies within the insurtech ecosystem that are primarily focused on Software as a Service (SaaS) with a B2B (Business to Business) business model have secured 43% of total funding – the highest rate in history.

From what we understand, this includes providers of payment solutions, risk management and underwriting software, or claims management and administration. A fair amount of these companies base their offerings on artificial intelligence (AI) or are expanding their portfolios with new AI products.

Regarding major trends in the industry, generative AI, climate risks, and health are three areas where the industry is focusing more this year, the report added.

Javier Santiso, CEO and General Manager, Mundi Ventures, commented: “After the uncertainty of previous years, the global insurtech market is now showing signs of further stabilisation. While the frenzy has cooled, we are seeing a positive rebound in the early-growth / breakout stages, particularly with Series B funding picking up.

“However, the late-stage market remains significantly constrained, with a freeze in growth and IPO phases. Many start-ups are now gearing up for potential IPOs in 2025 or 2026, setting profitable models and waiting for more favourable market conditions. This cautious environment is shifting investor focus towards proven business models with solid unit economics.”

Leire Jiménez, Chief Innovation Officer, MAPFRE, said: “What we are seeing worldwide is a slowdown in the economy since 2022, which is directly impacting investment in insurtech venture capital, some geographies more than others. US and Europe, for example, are back on track and showing an optimistic performance.

“However, Asia and Latin America are struggling to raise, the latter with funding at historic lows. Still, the Latin American ecosystem is resilient, and entrepreneurs continue to seek new formulas, models, and businesses to revitalise the sector. The region has great potential, more so at a time when the insurance gap is gradually shrinking due to the large volume of opportunities in it. Collaborative spaces and public-private partnerships are key to stabilise the market and drive it forward.”

Yoram Wijngaarde, Founder and CEO, Dealroom.co, added: “Insurance is a vast industry that has been largely unchanged for hundreds of years. It remains a huge target for tech efficiency and scale, but one that has been difficult to crack. Insurtech 2.0 is unbundling the challenge, zeroing in on niches like B2B SaaS, risk management, climate and cyber, with greater traction. Global breakout stage investment is on track to grow year on year in 2024, and European insurtech VC has already passed 2023’s total. Insurtech is iterating.”

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