LONDON, Feb 1 (Reuters) - Funding of the global insurance technology (insurtech) sector dropped to $4.5 billion in 2023, down 44% from 2022 and off 72% from its 2021 peak, broker Gallagher Re said in a report on Thursday, after investors got burnt by frothy valuations.

Poor performance by U.S. insurtech Lemonade, which has lost more than 85% of its stock market value since early 2021, is among high-profile setbacks to have curtailed the appeal of the sector.

"The poster child insurtechs that were well-known didn't perform particularly well when they went public," said Andrew Johnston, global head of insurtech at Gallagher Re.

"Lots of non-insurance investors were writing cheques, we've now seen a lot of those investors leave." However, reinsurers, who tend to focus on insurtech players at a more advanced stage of their growth, made investments in a record 148 deals, 12% higher than the previous record of 132 deals in 2019, the report showed.

The most active corporate venture capital investor in 2023 was Munich Re Ventures, while the most active traditional venture capital investor was Plug and Play.

Insurtech firms specialising in artificial intelligence were attracting attention, such as those using AI to detect claims fraud, Johnston said.

Deal size has shrunk in line with smaller valuations, and the number of deals last year held up better than deal volume, the report said.

There were 422 insurtech deals in 2023, down 19% from 2022 and 25% from 2021.

(Reporting by Carolyn Cohn; Editing by Kirsten Donovan)