Gallagher: Insurtech Funding Surges as AI Drives Investment

Insurtech investment has rebounded strongly in the first quarter of 2025, reaching US$1.31bn globally, according to the latest Gallagher Re Global Insurtech Report. 

This represents a 90.2% increase quarter-on-quarter and marks the highest quarterly total since Q3 2022.

The report, produced in collaboration between Gallagher Re, Gallagher and CB Insights, indicates that the insurtech sector has entered a new phase of maturity after a decade of evolution.

Companies focused on artificial intelligence captured 61.2% of total funding, amounting to US$710.86m, highlighting the industry's pivot toward technology that can transform underwriting, pricing and claims processes.

Property and casualty (P&C) insurtechs dominated the funding landscape, raising US$1.13bn during the quarter, while life and health (L&H) insurtech funding declined by 34.6% from the prior quarter to US$183.14m.

B2B technology vendors achieving record market share

Business-to-business (B2B) insurtechs have emerged as the primary focus for investors, accounting for 61.4 per cent of all P&C deals – the highest proportion recorded in more than a decade. In the L&H segment, B2B platforms captured 85.2% of deals, establishing a new record.

The number of B2B P&C insurtech deals increased from 26 in Q4 2024 to 43 in Q1 2025, reflecting growing demand for technology solutions that can integrate with existing infrastructure.

Average deal size rose 42.1% from the previous quarter to US$15.77m, driven by increased activity among B2B P&C technology vendors.

Three funding rounds exceeded US$100m during the quarter, all in the P&C space: Quantexa secured US$175m; Openly, a premium homeowners insurance provider, raised US$123m; and Instabase, an automation platform for document processing, obtained US$100m.

Reinsurer investment activity reaches new heights

Investment from reinsurance companies reached unprecedented levels in 2024, with 150 deals completed compared to 107 deals in 2021, despite total funding being four times lower.

This trend reflects the growing commitment of reinsurers to technology transformation, with approximately one-third of deals involving companies focused on AI applications.

The sector's evolution has been marked by distinct phases. The early years were characterised by what the report describes as "undisciplined future-gazing" and a disconnect between theoretical predictions and business realities. 

The pandemic period brought discipline and uncertainty, leading to restructurings and mergers.

The current era is defined by pragmatism, with renewed focus on applying technology within sound business models, as evidenced by recent deals and funding patterns.

A notable transaction was Munich Re's acquisition of Next Insurance, a digital insurance provider for small businesses, for US$2.6nm in March. This acquisition will facilitate the European reinsurance giant's direct insurance arm, ERGO, in entering the US market.

Guidewire, a provider of software solutions for property and casualty insurers, expanded its AI capabilities by acquiring Quantee, a Polish insurtech offering dynamic pricing software that employs machine learning algorithms.

Additional significant transactions included agency alliance SIAA's acquisition of DONNA ai, an artificial intelligence platform for insurance agencies, and Vouch's acquisition of StartSure, a specialist insurer for technology startups.

The United States maintained its dominance in the global insurtech landscape, with its share of global deals increasing 8.8 percentage points to 58.8%, the highest level since Q3 2017.

After a volatile 2024, which the report likened to “the duality of Dr Jekyll and Mr Hyde” with inconsistent funding patterns, 2025 has begun with what the report describes as "a surge of activity" in the insurtech sector.

“Perhaps we are in more than an insurtech spring, and in fact at the foothills of a longer-standing trend of sustainable adoption of technology into our industry from an insurtech cohort,” says Andrew Johnston, Global Head of Insurtech at Gallagher Re. 

“M&A activity is up, AI funding is now a significant part of overall insurtech funding, and 2024 marked a record high for re/insurer investing.”

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