Investment Insights in AI-Driven Insurtech for 2026
In the first quarter of 2026, insurtech investment reached a substantial $1.63 billion, driven primarily by interest in artificial intelligence technology, reports Gallagher Re. AI-focused companies attracted over 95% of this funding, underscoring a surge in capital toward tech-driven solutions within the insurance industry. This follows a similar investment of $1.67 billion in the previous quarter, suggesting renewed investor confidence after a three-year decline.
AI-specific insurtechs secured $1.55 billion through 68 transactions, with an average deal size exceeding the sector's norm at $25.79 million. AI firms dominated, with all ten largest deals of the quarter centered on AI-driven solutions. Early-stage funding also expanded, growing by 36.1% from the previous quarter to $548.5 million, the highest since Q3 2022. The average size of these deals surged to $14.06 million, a 278.8% increase year-over-year.
Life and health insurtech investment nearly doubled to $718.99 million, supported by large transactions, while property and casualty insurtech funding dropped by 31% to $907.14 million. Nonetheless, the average transaction size remained stable at $20.2 million, indicating consistent interest despite the decline in overall investment.
Andrew Johnston, Gallagher Re’s global head of insurtech, highlighted substantial recent funding levels compared to prior years' average of $1 billion quarterly investments. Johnston noted the industry's pivot toward transformative tech solutions, reflecting increasing AI integration across new insurance platforms and products. Since 2012, significant investments have been made in digital and cyber risk insurtechs, totaling $5.77 billion across 263 deals. In Q1 2026, entities dealing with AI liability and cyber insurance fields amassed $444.84 million, reflecting a heightened demand for policies covering AI-related risks.
Gallagher Re’s forthcoming report series will delve into AI liability insurance and its intersection with the cyber insurance market. Defined as coverage protecting against risks from AI systems, AI liability insurance addresses potential issues like algorithmic biases and AI-driven decision accountability. This coverage is crucial in high-risk sectors like healthcare, finance, and autonomous vehicles.
Freddie Scarratt, Gallagher Re’s global deputy head of insurtech, stressed the importance of balancing the opportunities and risks inherent in AI advancements. The rise of third-party AI liability insurance is expected to mirror the rapid growth seen in the cyber reinsurance market. Scarratt emphasized the inevitability of addressing AI-related risks as they increasingly influence the insurance landscape.