After several quarters of stagnation,InsurTechsector has entered full force in 2025. This is happening largely thanks to insurance technologies that are no longer futuristic but fundamental.
The globalInsureTechfunding increased by 90% in the first quarter of 2025. It reached $1.31 billion, marking the sector's strongest performance since the third quarter of 2022.These are the results according to Gallagher Re's latest global insurance technology report.The recovery has been driven by a wave of investment in AI-based platforms, particularly atthe insuranceof property and accidents (Property & Casualty or P&C).More and more insurers are looking for practical ways to automate and compete.
A total of 61% of the volume ofInsurTechinvestments in the first quarter went to start-ups focused on artificial intelligence.That equates to $710 million across 60 transactions, many of which are focused on insurance, claims and real-time risk modeling.
"This feels less like a surge in funding and more like a market correction — one that favors grounded, deployable technologies over shiny concepts and unicorn dreams," Brian McLaughlin, co-founder of MTech Capital, said in the report.
This shift describes an industry that has now entered its second decade of experimenting with technology and is finally settling into a more sustainable, if narrower, growth path.
InsurTech Spring?
The jump in capital allocations marked a sharp reversal from 2024, when funding fell to $690 million amid investor caution.Analysts are now hailing a possible “InsurTechspring' with signs that a more sustainable, technology-driven transformation is underway in the property and casualty, life and health insurance markets.
"It's not just recovery," says Dr. Andrew Johnston, global head ofInsurTechin Gallagher Re and editor of the report."We're seeing an evolution in maturity, focus and execution — especially around AI. What's new is that capital is being allocated with much more discipline."
The largest share of investment is in ...
After several quarters of stagnation,InsurTechsector has entered full force in 2025. This is happening largely thanks to insurance technologies that are no longer futuristic but fundamental.
The globalInsureTechfunding increased by 90% in the first quarter of 2025. It reached $1.31 billion, marking the sector's strongest performance since the third quarter of 2022.These are the results according to Gallagher Re's latest global insurance technology report.The recovery has been driven by a wave of investment in AI-based platforms, particularly atthe insuranceof property and accidents (Property & Casualty or P&C).More and more insurers are looking for practical ways to automate and compete.
A total of 61% of the volume ofInsurTechinvestments in the first quarter went to start-ups focused on artificial intelligence.That equates to $710 million across 60 transactions, many of which are focused on insurance, claims and real-time risk modeling.
"This feels less like a surge in funding and more like a market correction — one that favors grounded, deployable technologies over shiny concepts and unicorn dreams," Brian McLaughlin, co-founder of MTech Capital, said in the report.
This shift describes an industry that has now entered its second decade of experimenting with technology and is finally settling into a more sustainable, if narrower, growth path.
InsurTech Spring?
The jump in capital allocations marked a sharp reversal from 2024, when funding fell to $690 million amid investor caution.Analysts are now hailing a possible “InsurTechspring' with signs that a more sustainable, technology-driven transformation is underway in the property and casualty, life and health insurance markets.
"It's not just recovery," says Dr. Andrew Johnston, global head ofInsurTechin Gallagher Re and editor of the report."We're seeing an evolution in maturity, focus and execution — especially around AI. What's new is that capital is being allocated with much more discipline."
The largest share of investment is in the area of P&C.Funding for P&CInsurtechjumped 175% from the previous quarter to $1.13 billion, accounting for nearly 87% of all investments.Nine of the top 10 funding rounds have gone to companies in this space, including $175 million for Quantexa, $123 million for Openly, and $100 million for Instabase.
In contrast, financing for life insurance and healthInsurTechcompanies fell 34% to $183 million.
The number of transactions has also increased significantly.97 were concluded during the quarterInsurTechdeals (the highest for the last four quarters) compared to 78 in the fourth quarter of 2024. The average size of these deals increased by 42% to $15.77 million.
Early stage insurance technology
Still, not everyone wins.The startersInsurTechcompanies raised just $170 million in the first quarter –down 12% from the previous quarter and the lowest level in nearly five years.The size of these types of deals averaged just $3.7 million, compared to $4.7 million in the fourth quarter.
In short, as the tide rises, it lifts large boats more than small ones.The newfound discipline of the market is rooted in the measurable utility of artificial intelligence.Rather than offering disruption to established business models, an increasing numberInsurTechcompanies promise something far more attractive to insurers: results.
From automated data entry to predictive analytics and claims triage, AI is now being used to streamline the insurance value chain.In auto insurance alone, companies like Zego and Nirvana are using real-time telematics to refine pricing and reduce losses.Zego claims they can cancel reckless drivers' policies within two weeks.Nirvana says it uses data from 20 billion miles traveled to help drive dynamic underwriting and claims resolution, while reducing costs and improving the customer experience.
A “New Era” of AI and IoT
"We have entered a new era of artificial intelligence and the Internet of Things," says Nirvana's Rushil Goel."Insurers can use this data to achieve unparalleled results. It not only improves loss ratios, but also the customer experience."
This pragmatism is attracting more and more reinsurers.In the first quarter, a record 45 technological investments by insurers were registered.Among the most active are Blue Venture Fund, MassMutual Ventures and Munich Re Ventures.
"Artificial intelligence is now being operationalized, not just theorized," says Freddie Scarratt of Gallagher Re.He is the Deputy Global Head ofInsurTech."It's a sea change. That's why capital is coming back."
InsurTechcompanies in the automotive sector raised $429 million in the quarter.This shows the enduring size and complexity of the automotive market.About $13 billion has been raised in auto insurance since 2012.This represents about 22% of all investments in insurance technology.The report explains this interest with data and telemetry in modern vehicles.
Auto insurance is slow to change
Despite everything, the auto insurance business remains brutally competitive.Changes in it proceed slowly.Even when AI enables real-time pricing, the hurdles are serious.Scale and regulations remain key hurdles.Insurers must balance precision with fairness.They should not set prices too precisely.Otherwise, many consumers will remain uninsured.
The report also warns of a "hyperfixation of risk".It occurs when excessive precision widens the coverage gap.Artificial intelligence improves pricing.But it also threatens to make insurance unaffordable.Riskier drivers may be excluded from the system entirely.
Some observers characterized the revival in the first quarter as a “InsurTechspring," driven not only by new funding but also by a mature ecosystem. Strategic acquisitions (from Munich Re's $2.6 billion purchase of Next Insurance to Guidewire's acquisition of pricing company Quantee) signal that proven players are no longer standing idly by.
Optimism is real, but it comes with conditions.Funding is still well below the sector's peak in 2021, and startups continue to face serious challenges in raising capital.Meanwhile, venture capitalists are asking increasingly tough questions and rewarding fewer and fewer companies.
But if recent data is any indication, the market may be entering a more rational, return-oriented phase.And that might just be what the industry needs.
As Zego CEO Sten Saar says: "Risk isn't going away - and neither is the need for insurance."
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After several quarters of stagnation,InsurTechsector has entered full force in 2025. This is happening largely thanks to insurance technologies that are no longer futuristic but fundamental.
The globalInsureTechfunding increased by 90% in the first quarter of 2025. It reached $1.31 billion, marking the sector's strongest performance since the third quarter of 2022.These are the results according to Gallagher Re's latest global insurance technology report.The recovery has been driven by a wave of investment in AI-based platforms, particularly atthe insuranceof property and accidents (Property & Casualty or P&C).More and more insurers are looking for practical ways to automate and compete.
A total of 61% of the volume ofInsurTechinvestments in the first quarter went to start-ups focused on artificial intelligence.That equates to $710 million across 60 transactions, many of which are focused on insurance, claims and real-time risk modeling.
"This feels less like a surge in funding and more like a market correction — one that favors grounded, deployable technologies over shiny concepts and unicorn dreams," Brian McLaughlin, co-founder of MTech Capital, said in the report.
This shift describes an industry that has now entered its second decade of experimenting with technology and is finally settling into a more sustainable, if narrower, growth path.
InsurTech Spring?
The jump in capital allocations marked a sharp reversal from 2024, when funding fell to $690 million amid investor caution.Analysts are now hailing a possible “InsurTechspring' with signs that a more sustainable, technology-driven transformation is underway in the property and casualty, life and health insurance markets.
"It's not just recovery," says Dr. Andrew Johnston, global head ofInsurTechin Gallagher Re and editor of the report."We're seeing an evolution in maturity, focus and execution — especially around AI. What's new is that capital is being allocated with much more discipline."
The largest share of investment is in ...
After several quarters of stagnation,InsurTechsector has entered full force in 2025. This is happening largely thanks to insurance technologies that are no longer futuristic but fundamental.
The globalInsureTechfunding increased by 90% in the first quarter of 2025. It reached $1.31 billion, marking the sector's strongest performance since the third quarter of 2022.These are the results according to Gallagher Re's latest global insurance technology report.The recovery has been driven by a wave of investment in AI-based platforms, particularly atthe insuranceof property and accidents (Property & Casualty or P&C).More and more insurers are looking for practical ways to automate and compete.
A total of 61% of the volume ofInsurTechinvestments in the first quarter went to start-ups focused on artificial intelligence.That equates to $710 million across 60 transactions, many of which are focused on insurance, claims and real-time risk modeling.
"This feels less like a surge in funding and more like a market correction — one that favors grounded, deployable technologies over shiny concepts and unicorn dreams," Brian McLaughlin, co-founder of MTech Capital, said in the report.
This shift describes an industry that has now entered its second decade of experimenting with technology and is finally settling into a more sustainable, if narrower, growth path.
InsurTech Spring?
The jump in capital allocations marked a sharp reversal from 2024, when funding fell to $690 million amid investor caution.Analysts are now hailing a possible “InsurTechspring' with signs that a more sustainable, technology-driven transformation is underway in the property and casualty, life and health insurance markets.
"It's not just recovery," says Dr. Andrew Johnston, global head ofInsurTechin Gallagher Re and editor of the report."We're seeing an evolution in maturity, focus and execution — especially around AI. What's new is that capital is being allocated with much more discipline."
The largest share of investment is in the area of P&C.Funding for P&CInsurtechjumped 175% from the previous quarter to $1.13 billion, accounting for nearly 87% of all investments.Nine of the top 10 funding rounds have gone to companies in this space, including $175 million for Quantexa, $123 million for Openly, and $100 million for Instabase.
In contrast, financing for life insurance and healthInsurTechcompanies fell 34% to $183 million.
The number of transactions has also increased significantly.97 were concluded during the quarterInsurTechdeals (the highest for the last four quarters) compared to 78 in the fourth quarter of 2024. The average size of these deals increased by 42% to $15.77 million.
Early stage insurance technology
Still, not everyone wins.The startersInsurTechcompanies raised just $170 million in the first quarter –down 12% from the previous quarter and the lowest level in nearly five years.The size of these types of deals averaged just $3.7 million, compared to $4.7 million in the fourth quarter.
In short, as the tide rises, it lifts large boats more than small ones.The newfound discipline of the market is rooted in the measurable utility of artificial intelligence.Rather than offering disruption to established business models, an increasing numberInsurTechcompanies promise something far more attractive to insurers: results.
From automated data entry to predictive analytics and claims triage, AI is now being used to streamline the insurance value chain.In auto insurance alone, companies like Zego and Nirvana are using real-time telematics to refine pricing and reduce losses.Zego claims they can cancel reckless drivers' policies within two weeks.Nirvana says it uses data from 20 billion miles traveled to help drive dynamic underwriting and claims resolution, while reducing costs and improving the customer experience.
A “New Era” of AI and IoT
"We have entered a new era of artificial intelligence and the Internet of Things," says Nirvana's Rushil Goel."Insurers can use this data to achieve unparalleled results. It not only improves loss ratios, but also the customer experience."
This pragmatism is attracting more and more reinsurers.In the first quarter, a record 45 technological investments by insurers were registered.Among the most active are Blue Venture Fund, MassMutual Ventures and Munich Re Ventures.
"Artificial intelligence is now being operationalized, not just theorized," says Freddie Scarratt of Gallagher Re.He is the Deputy Global Head ofInsurTech."It's a sea change. That's why capital is coming back."
InsurTechcompanies in the automotive sector raised $429 million in the quarter.This shows the enduring size and complexity of the automotive market.About $13 billion has been raised in auto insurance since 2012.This represents about 22% of all investments in insurance technology.The report explains this interest with data and telemetry in modern vehicles.
Auto insurance is slow to change
Despite everything, the auto insurance business remains brutally competitive.Changes in it proceed slowly.Even when AI enables real-time pricing, the hurdles are serious.Scale and regulations remain key hurdles.Insurers must balance precision with fairness.They should not set prices too precisely.Otherwise, many consumers will remain uninsured.
The report also warns of a "hyperfixation of risk".It occurs when excessive precision widens the coverage gap.Artificial intelligence improves pricing.But it also threatens to make insurance unaffordable.Riskier drivers may be excluded from the system entirely.
Some observers characterized the revival in the first quarter as a “InsurTechspring," driven not only by new funding but also by a mature ecosystem. Strategic acquisitions (from Munich Re's $2.6 billion purchase of Next Insurance to Guidewire's acquisition of pricing company Quantee) signal that proven players are no longer standing idly by.
Optimism is real, but it comes with conditions.Funding is still well below the sector's peak in 2021, and startups continue to face serious challenges in raising capital.Meanwhile, venture capitalists are asking increasingly tough questions and rewarding fewer and fewer companies.
But if recent data is any indication, the market may be entering a more rational, return-oriented phase.And that might just be what the industry needs.
As Zego CEO Sten Saar says: "Risk isn't going away - and neither is the need for insurance."