Gallagher Re has published its most recent Global InsurTech Report examining the role of artificial intelligence (AI) in the insurance and reinsurance industries. In it, they say funding for insurtech deals globally has risen $1.27-billion (all figures in U.S. dollars), the highest level since the first quarter of 2023. Average deal sizes rose, while the overall deal count declined to the lowest quarterly count since the second quarter of 2020.

“Global insurtech funding rose 39.7 per cent quarter-on-quarter to $1.27-billion in Q2, 2024,” they write. “This increase was attributable to a near doubling of average deal sizes from $9.81-million in Q1 2024 to $18.46-million in Q2.” 

Meanwhile, the deal count dropped 23.4 per cent. “Quarterly deal count has not been this low in four years when Q2 2020 saw 74 deals,” they add. Of the total, 32.9 per cent of the deals concerned AI-focused insurtech companies and 40.2 per cent of the deals were focused on risk-focused companies.

The report goes on to say the application of AI in pricing and underwriting represents the biggest potential win for the industry.

“Where underwriting has been entirely delegated to AI, success has been limited. In fact, frequently the results are less impressive than when humans run the entire show,” the report states. “Importantly, that is not to suggest that these AI experiments are a failure. What we are observing is a growing trend towards bionic underwriting, where AI tools are used to perform very predictable tasks (typically data scrubbing) at speed, which then helps a human make quicker decisions with a better view of the risk in question. It is becoming clearer that removing the human entirely is a mistake.”