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Insurtech funding: who is raising and why
Gallagher Re data on insurtech funding through Q2 2026, the shift to AI, the drop in early-stage deals, and what the money means for business insurance buyers.
Insurtech funding recovered strongly into 2026. Gallagher Re's Global InsurTech Report counted $5.08 billion raised in 2025, up 19.5% from $4.25 billion in 2024, and $2.44 billion in the second quarter of 2026 alone, the highest quarterly total since Q2 2022. The money is concentrating in AI-focused companies and in larger, later-stage rounds, while early-stage funding has thinned.
What the numbers say
Funding data comes from trackers that define "insurtech" differently, so totals differ. This guide uses Gallagher Re's Global InsurTech Report, which counts private funding rounds by insurance technology companies and tracks (re)insurer participation. Other trackers report bigger totals because they include more companies and deal types; for example, a news summary of 2025 data noted that KPMG and FT Partners reported higher figures than Gallagher Re. Use one source consistently when comparing periods.
| Period | Gallagher Re figure | Source and date |
|---|---|---|
| Full year 2024 | $4.25 billion | Gallagher Re Q4 2025 report, as reported February 2026 |
| Full year 2025 | $5.08 billion (+19.5%) | Gallagher Re Q4 2025 report, as reported February 2026 |
| Q1 2026 | $1.63 billion | Gallagher Re Q1 2026 report |
| Q2 2026 | $2.44 billion, 107 deals | Gallagher Re Q2 2026 report, reported by Reinsurance News, August 6, 2026 |
Other details from the Q2 2026 report, as reported by Reinsurance News on August 6, 2026 and Risk & Insurance on August 13, 2026:
- AI-focused insurtechs took 99.1% of Q2 funding, $2.42 billion across 95 deals. Every round above $5 million in the quarter went to an AI-focused company.
- Deals of $100 million or more raised $1.67 billion, the strongest quarter for large rounds since Q4 2021.
- Early-stage funding fell 51.8% from the previous quarter, from $548 million to about $264 million.
- (Re)insurers took part in 27 investments, down from 32 in Q1 2026. For all of 2025, Gallagher Re counted 162 (re)insurer investments, a record, according to coverage of the Q4 2025 report.
Gallagher Re's Andrew Johnston said, "Capital availability is clearly not a problem." The concern the report raised is concentration: more money in fewer companies, mostly from venture and private equity investors rather than insurers.
Where the money went before AI
The 2020 and 2021 peak funded full-stack carriers, digital agencies and embedded-insurance platforms on growth-first terms. Many of those businesses then met higher claims costs, reinsurance repricing and a tighter investor mood. Funding fell sharply in 2022 and 2023, and several startups were sold, merged into larger groups or shut. Those that survived mostly narrowed their focus to a line where they had an edge: small commercial, cyber, or a specific industry.
Examples among the small-business names buyers meet: NEXT Insurance, acquired in full by ERGO (Munich Re) in a transaction ERGO said closed July 1, 2025; Coalition and At-Bay in cyber; Embroker and Vouch in startup and technology risk; Pie Insurance in workers' compensation; Thimble in on-demand coverage for small operators; and Huckleberry in workers' comp. Each profile explains how that company is structured and who issues its policies. Note that some are carriers, some are agencies and some are both; see Full-stack insurtechs vs MGAs vs digital agencies.
Why the money is going to AI
Investors are backing software that cuts the cost of underwriting and claims work: submission intake, document reading, appetite triage, claims summarization. See How AI is used in commercial underwriting and Generative AI in the insurance industry. The pitch is lower expense ratios without taking balance-sheet risk. That is why many funded companies are software vendors or MGAs rather than risk-bearing carriers. A managing general agent can grow on a carrier's paper and reinsurers' capacity, using venture funds for technology rather than for statutory capital. A full-stack carrier needs both.
Why a buyer should care
Funding patterns decide which models survive. The practical questions for a business owner:
- Who actually bears the risk? Look at the declarations page. The insurer of record, not the brand on the website, pays the claim. Check its AM Best rating and whether it is admitted. A startup MGA may be writing on a carrier's paper, sometimes through a fronting arrangement with the risk reinsured elsewhere.
- Does the model rely on cheap capital? Underwriting profit and a sustainable combined ratio matter more than headline growth. A company priced for growth can raise rates or tighten appetite abruptly when capital gets scarce. Renewal premium shocks and non-renewals follow.
- Is your claim handled by software or people? Faster first notice and simple-claims automation are a real benefit; contested claims need a human. Ask how to reach one.
- What happens if the company is sold or fails? Policy obligations stay with the insurer, and state guaranty funds exist for admitted insurers, with limits; see what happens when an insurer fails: guaranty funds and business policies. An agency or MGA that disappears is a servicing problem, not a coverage one, if the policy is already bound, but it can mean a hurried move at renewal.
Hypothetical example
Say a 10-person landscaping company buys a package from a digital MGA in 2025 and the MGA's carrier partner pulls capacity in 2026. The policy keeps running to expiration, but the renewal quote is not coming. A broker who has already built relationships with other markets can move the account in weeks. A business that bought only through the MGA's app is starting from scratch and shopping near expiry.
Reading funding news
- A large round says investors like the growth story; it does not say the insurer is profitable or well capitalized.
- "AI-powered" describes technology; check whether the company is a carrier, MGA or agency.
- Insurer-backed investment, tracked by Gallagher Re, often signals a commercial partnership: capacity or distribution for the startup.
- A drop in early-stage deals means fewer new entrants, and the established insurtechs compete for the largest customers.
Key takeaways
- Gallagher Re counted $5.08 billion of insurtech funding in 2025 and $2.44 billion in Q2 2026 alone, the highest quarter since Q2 2022.
- AI-focused companies took 99.1% of Q2 2026 funding while early-stage funding fell 51.8% quarter over quarter.
- Different trackers use different definitions; compare periods from one source only.
- For a buyer, funding matters through carrier stability, capacity and renewal behavior, so identify who bears the risk and keep a broker relationship that can move your account.