7 MAY 2025:  The InsurTech industry has experienced a significant surge in funding during the first quarter of 2025, reaching USD1.31 billion, according to the latest installment of Gallagher Re’s flagship InsurTech reports, released today.

P&C InsurTechs raised USD1.13B in funding during the quarter, the highest level since Q3 2022. But early-stage InsurTech funding fell 11.9%, quarter on quarter, to a nearly five-year low in Q1 2025, raising USD170.79M.

Some 61.2% of Q1 2025 InsurTech deals went to AI-centered companies (USD710.86M), and five (re)insurance investors made three or more tech investments in Q1 2025.

The report also found that Q1 2025 was only the second quarter since Q4 2022 to see three or more USD100M+ mega-round deals, all of which went to P&C InsurTechs: Quantexa (USD175M), Openly (USD123M), and Instabase (USD100M).

Average InsurTech deal sizes also increased with the broader funding surge, rising 42.1% quarter on quarter to USD15.77M.

The increase was primarily attributable to the rise in deals to B2B (i.e. tech vendor) P&C InsurTechs, from 26 in Q4 2024 to 43 this quarter. B2B InsurTechs raised 61.4% of all P&C deals — the highest level in more than a decade — and 85.2% of all L&H deals — the highest on record.

By geography, the US saw its global InsurTech deal share rise 8.8 percentage points to 58.8%, quarter on quarter, in Q1 2025, the highest since Q3 2017.

Elsewhere, funding to L&H InsurTechs declined 34.6% quarter on quarter to USD183.14M in Q1 2025.

Andrew Johnston, Global Head of InsurTech at Gallagher Re, said 2025 had got off to a fascinating start, with many commentators talking about an ‘InsurTech spring’ amid a flurry of notable deal activity and a renewed focus on acquisitions and strategic partnerships.

He went on: “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. 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 – so the future of InsurTech is certainly looking brighter than it was 24 months ago.

“As we look forward, we are also seeing rapidly growing interest in aspects of climate finance. Some InsurTechs are pioneering carbon credit insurance, with Artio Carbon making headlines after launching an early-stage carbon insurance offering backed by major insurers. Those InsurTechs focusing on providing technology, data and insurance solutions for AI liability products are also catching the eye.”

Gallagher Re’s 2024 Global InsurTech report series

Following on from the 2024 quarterly series, which investigated how the (re)insurance industry was implementing AI solutions, this year’s reports will zero in on the AI solutions tailored to the four largest insurance business lines (by gross written premium); auto/motor, property, commercial, and life & health.

In the Q1 2025 report, the spotlight is on auto/motor focused InsurTechs: a sector which has cumulatively had USD13.13B invested in it since 2012.

Globally to date, 266 auto-focused InsurTech funding deals came from the US, while 71 deals were struck in India and 52 deals originated from the UK.

The report also details the top applications for AI in auto/motor insurance and the prospect of AI-driven, autonomous vehicles.

Andrew commented: “Auto/motor insurance, particularly in personal lines, has become a highly commoditized market in recent years, since the advent of comparison sites. There is a lack of differentiation between risk vectors, and prices often move in a very narrow range. And InsurTechs competing in this market, including those deploying AI to lend them an edge, not only have this competitive pricing environment to consider. They are also unlikely to have the brand recognition of established incumbents. If they are to stand out, their solutions must be truly innovative, and compelling.”

Other key features of this report include:

• InsurTech business case studies on Zego, Nirvana, EIS Group, and Reserv • Deal of the Quarter profile on HDVI • Columns by Markerstudy Insurance Services Limited, Apollo Underwriting and Inaza • Investor Corner Q&A: Brian McLoughlin, MTech