By Lewis Nibbelin, Research Writer, Triple-I
Global insurtech funding hit $1.01 billion in the third quarter of 2025, marking three consecutive years of average quarterly funding near $1.1 billion, according to a recent Gallagher Re report. Raising $751.72 million, A.I.-based insurtechs accounted for almost 75 percent of all funding across 49 deals, raising $751.72 million, largely attributed to the commercial insurance industry’s evolving risk profile.
Fewer, bigger deals
Though down 7.3 percent from the previous quarter, third-quarter results reflected less quarterly volatility compared to the preceding three-year period, which fluctuated with greater uncertainty around a higher average of $2.7 billion. Deal count also dropped to 76 – the lowest total count since the second quarter of 2020 – as average deal size rose from $12.83 million in the second quarter of 2025 to $15.70 million.
Property/casualty insurers financed eight of the quarter’s 10 largest deals, propelling the industry’s total third-quarter funding to $690.28 million – a 90.5 percent increase from its seven-year low in the prior quarter.
Reinsurers led another dramatic market shift by backing a record sector high of 51 tech investments, suggesting “the appetite for pure venture risk is alive and well” even as investors place fewer “massive, high-risk bets” in favor of “a more balanced approach,” said Andrew Johnston, global head of InsurTech at Gallagher Re.
A.I. takes center stage
With over 25 percent of commercial lines now sold through digital channels, the report outlines how insurers can meet the demands of changing customer expectations and business practices – particularly the digital collection and storage of customer data – by leveraging A.I.
By improving data extraction, pattern identification, and fraud detection, A.I. tools streamline routine decision-making while freeing up underwriters’ capacity to build client relationships and assess complicated, high-value risks, the study found. On a concrete level, such efficiency gains include high-resolution aerial imagery to quickly verify property damages, dashcams to monitor real-time driving behaviors, and wearable IoT solutions to prevent workplace injuries, demonstrating the utility of A.I.-powered insurtechs across commercial lines.
Effective integration, however, transcends simple adoption. Freddie Scarratt, Gallagher Re’s global deputy head of InsurTech, emphasized the enduring challenges of applying A.I. to legacy administration systems and of an emerging talent gap to bridge data and A.I. literacy expertise with traditional underwriting.
Business leaders expressed similar concerns in a Gallagher Re survey released earlier this year, highlighting a skills shortage and pervasive ethical implications as barriers to A.I. adoption.
Underscoring the industry’s goal to “supercharge” underwriting judgement rather than replace it, Scarratt concluded that “the most successful (re)insurers of the future will be those that combine their expertise in relationship management, complex deal structuring, and cycle management with the speed, scale, and analytical power of A.I.”
Learn More:
JIF 2025: Litigation Trends, Artificial Intelligence Take Center Stage
Tech — Especially A.I. — Is Top of Mind for Global Insurance Executives