2025 Gallagher Re InsurTech Report: AI Trends & Investment Insights
Gallagher Re’s Global InsurTech Report for 2025 highlights significant trends in the insurance technology sector, focusing on AI advancements and addressing skepticism about its profitability. With two-thirds of the $5.08 billion annual investment targeting AI initiatives, 2025 marks a landmark year for AI integration in the insurance industry. However, the report warns that while enthusiasm is high, realistic expectations about revenue generation must temper this excitement.
In 2025, the insurtech sector experienced a 19.5% increase in annual funding compared to 2024, signifying a notable recovery. This funding surge was primarily driven by a robust fourth quarter, accounting for $1.68 billion across nearly 230 AI-focused deals—the highest quarterly totals since 2022. More than 100 insurtech companies secured capital, reflecting a strong investment landscape noted by Gallagher Re.
Significant Growth in Property and Casualty Segment
The property and casualty segment led the recovery, with funding soaring by 34.9% to $3.49 billion in 2025. Mega-round deals significantly contributed to this growth, exemplified by CyberCube’s $180 million investment round and ICEYE’s $174.81 million Series E funding. The number of deals exceeding $100 million increased from six to eleven, illustrating investor confidence in large-scale insurtech initiatives.
Regional Dynamics in InsurTech Investments
Geographically, the United States captured a substantial share of global insurtech investments, accounting for 55.74% of deals, an increase from the previous year. Silicon Valley’s insurtechs notably increased their deal share from 8.72% to 16.12%, underscoring the region's importance in driving technological innovation within the insurance sector.
Challenges in AI-driven Profitability
Despite significant capital inflows, converting AI-driven efficiency gains into profitability remains challenging for the insurance industry. Gallagher Re's report discusses the "return on investment paradox," highlighting that technological advancements provide efficiency but do not necessarily translate into productivity or profitability improvements. There's broader industry uncertainty about AI's capacity to generate new revenue streams or merely enhance existing operations.
Transformative Role of AI in Life, Accident, and Health Insurance
The report explores AI's transformative impact on life, accident, and health insurance, identifying biometric data from health wearables, electronic health records, and genomic analysis as key areas of potential. With 44% of Americans using health-monitoring devices, insurtechs like dacadoo and HealthIQ are refining risk assessment and pricing models based on this data. Furthermore, electronic health records and genomic insights are presenting new avenues for underwriting enhancements and tailored risk management.
For a detailed exploration, the complete report is available for stakeholders seeking in-depth analysis. Understanding an insured's claims philosophy is crucial for navigating complex market conditions, particularly with challenges like poor post-surgical care coordination in workers' compensation and the financial implications of occupational cancers demanding vigilance due to the growing global cancer burden.