InsurTech funding surge continues — with AI taking centre stage
Global InsurTech funding remained robust in Q1 2026, with $1.63 billion raised, according to Gallagher Re’s latest Global InsurTech Report.
While slightly down from the $1.67 billion raised in Q4 2025, these two quarters represent the highest levels of InsurTech funding since Q3 2022, signalling a sustained resurgence of capital in the sector, the company said.
According to the report: “AI-labelled InsurTechs continued to capture the majority of the funding landscape, securing 95.2% of Q1 2026 funding — a record high for AI. These companies raised $1.55 billion across 68 deals, with an average deal size of $25.79 million, surpassing the overall InsurTech average. Notably, all of the quarter’s top 10 deals by funding amount went to AI-centred companies.”
The report added that the first quarter of 2026 saw several notable funding trends:
• Early-stage funding surged 36.1% quarter-on-quarter to $548.50 million, the highest level since Q3 2022. The average early-stage deal size jumped 278.8% year-on-year to $14.06 million.
• Life & Health (L&H) InsurTech funding nearly doubled quarter-on-quarter to $718.99 million, driven by large deals.
• Property & Casualty (P&C) InsurTech funding fell 31% quarter-on-quarter to $907.14 million, though the average deal size held steady at $20.2 million.
Andrew Johnston, Global Head of InsurTech at Gallagher Re, noted: “Q4 2025 and Q1 2026 ranked as the highest for global InsurTech funding since Q3 2022 — bucking the now three-year trend of quarterly funding of around $1 billion.
“This provides further evidence that there is a return of capital into this space — and strikingly, 95.2% of Q1 2026 InsurTech funding went to AI-labelled companies, underscoring the industry’s commitment to this transformative technology.”
The report also highlights the growing convergence of AI and InsurTech, with nearly all new tools and companies identifying as AI-powered. Since 2012, InsurTechs addressing digital and cyber risks have raised $5.77 billion across 263 deals. In Q1 2026 alone, InsurTechs relevant to AI liability and cyber insurance raised $444.84 million.
Johnston, added: "AI and InsurTech are now almost synonymous. As an industry, we must embrace the opportunities AI presents while addressing the challenges it brings. The future of AI liability insurance isn’t coming; it’s already here, and it’s up to us to lead the way."
The Q1 2026 report marks the beginning of the final year in Gallagher Re’s three-year series of AI-focused InsurTech reports.
While the 2024 and 2025 reports explored AI’s applications across the insurance value chain and its impact on major business lines, the 2026 series shifts focus to the future.
This year’s reports will examine the opportunities and risks AI is creating, starting with the emerging field of AI liability insurance and its intersection with the evolving cyber insurance market.
AI liability insurance is designed to protect businesses from financial losses caused by AI systems, particularly in high-stakes sectors such as healthcare, finance, and autonomous vehicles.
As AI adoption accelerates, the demand for such specialised coverage is expected to grow. The report highlights that businesses deploying AI face unique risks, including algorithmic bias, data quality issues, and liability for AI-driven decisions. These challenges are driving the development of new insurance products, endorsements, and exclusions tailored to address AI-related exposures.
Freddie Scarratt, global deputy head of InsurTech at Gallagher Re, commented: "The speed of AI’s evolution is extraordinary, but it brings new risks alongside opportunities. The emerging landscape of third-party AI liability insurance is not just an interesting sideline; it’s a fast-growing necessity, poised to mirror the explosive growth we’ve witnessed in the cyber reinsurance market. The silent risk of AI is becoming audible and ignoring it is no longer an option."
Gallagher Re said that its report underscores the need for the re/insurance industry to adapt to the challenges and opportunities posed by AI.
As AI continues to reshape the risk landscape, insurers must develop robust data management strategies, implement ongoing testing and monitoring of AI tools, and create specialised products to address emerging exposures.
The report predicts that AI liability insurance will follow a trajectory similar to cyber insurance, evolving from exclusions and endorsements to bespoke policies as the market matures.
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