InsurTech Funding Hits US$1.63bn as AI Risks Coalesce

The global insurtech sector is currently undergoing a fundamental shift, moving beyond simple digitisation toward a landscape defined by the convergence of AI and cyber risk. 

According to the latest Q1 2026 Global InsurTech Report from Gallagher Re, this evolution is being met with significant capital. 

Investment into the sector remained resilient in the first quarter of the year, reaching US$1.63bn.

While this represents a marginal dip from the US$1.67bn recorded in the final quarter of 2025, it reinforces a sustained return of capital to the space, bucking a three-year trend of flat quarterly funding.

A staggering 95.2% of all insurtech funding in the first quarter was directed toward AI-focused companies. 

The rise of the digital risk category

The report suggests that the industry is approaching an inflection point where cyber insurance, professional indemnity and AI liability are morphing into a singular business line: Digital Risks. 

This shift is driven by the reality that the primary drivers of these exposures often emanate from the same sources, such as malicious threat actors or technical failures within concentrated cloud infrastructure.

For those monitoring the evolution of open payments and digital infrastructure, the implications are significant. 

As AI agents move from experimental phases into production – executing commands and triggering workflows with the same privileges as human administrators – network perimeters are proving insufficient. 

The industry is now seeing the emergence of silent AI risk, where AI-related exposures are inadvertently picked up by traditional general liability or professional indemnity policies that were never priced or designed for such nuances.

Specialised solutions for a probabilistic era

In response to these gaps, a new cohort of specialists is emerging.

The report highlights firms like Munich Re, which pioneered AI performance guarantees, and newer players like Testudo and Armilla that target third-party liability for AI deployers. 

These firms are grappling with the fundamental difference between AI and traditional software: AI is probabilistic rather than deterministic. 

If AI makes a discriminatory recruitment decision or a chatbot provides legally binding misinformation, the liability could fall on the deploying organisation rather than the developer.

The Deal of the Quarter serves as a practical example of this integrated approach.

Paris-based Stoïk closed a US$21.7m (€20m) Series C round in January to scale its platform, which combines cyber insurance with active risk prevention and in-house incident response. 

By acting as an outsourced Chief Information Security Officer for SMEs, Stoïk aligns its financial priorities with those of its clients, using AI agents to automate triage and identify vulnerabilities before they escalate.

Benchmarking the future of reliability

However, a significant hurdle remains: the inadequacy of current AI evaluation methods. 

Freddie Scarratt, Global Deputy Head of InsurTech at Gallagher Re, adds: “The accumulation of silent AI risk represents a fundamental threat to underwriting discipline – it creates a scenario where insurers are providing ‘accidental’ capacity for complex, high-stakes events they have neither modelled nor priced” 

Gallagher Re warns that the tech industry’s reliance on empirical benchmarks – standardised tests on static datasets – is not fit for measuring real-world loss. 

For a credible AI insurance market to scale, the industry requires a move toward behavioural evaluation.