Emerging Risks in Insurance from AI Infrastructure

Gallagher Re has highlighted the emerging risks in the insurance landscape linked to artificial intelligence infrastructure, focusing on the challenges and opportunities for underwriters dealing with the rapid growth of data centers and complex computing systems.

The 2026 Global InsurTech Report by Gallagher Re explores the interactions between AI expansion, data center growth, and the resulting implications for insurers and reinsurers. This report is part of a series begun in 2024, aiming to track AI's impact on the insurance sector. Notably, the period around 2025 saw tech giants invest over $1 trillion into data centers and related infrastructure, marking a critical phase of AI expansion. Such developments underscore AI-focused InsurTech startups as significant recipients of this financial influx, capturing nearly two-thirds of annual funding by the second quarter of 2026.

Changing Underwriting Landscapes

The report addresses the evolving underwriting landscape as AI infrastructure grows. The challenge for insurers lies in the expansion of data centers and the accompanying sophisticated AI systems. These new operational landscapes offer insurers and reinsurers the opportunity to enhance their underwriting capabilities to address these emerging infrastructure risks effectively. By examining AI's interaction with critical infrastructure, Gallagher Re provides insights into potential new categories of risk and how the insurance industry can adapt.

Investment Trends and Market Dynamics

Investment trends in the InsurTech sector have gained momentum, with a marked rise in funding at the close of 2025 and the beginning of 2026. On average, investments reached $1.65 billion per quarter, increasing from approximately $1.1 billion previously. Despite increased capital, it has become more concentrated among a select number of companies, potentially reducing the diversity of technology providers available to insurers and reinsurers.

Notable Funding Surge

In the second quarter of 2026, InsurTech funding surged to $2.44 billion across 107 deals, the highest since Q2 2022. AI-focused InsurTechs commanded an impressive 99.1% of the total funds during this period. Significant contributions to this upward trend include mega-round deals of $100 million or more, with property and casualty-focused InsurTech leading this increase at over $1.84 billion in funding.

Industry Talent and Technological Balance

The report also covers shifts in the talent landscape, noting a movement of experienced InsurTech professionals back into traditional insurance companies. While this may suggest industry maturity, it could also limit innovation typically spurred by startup energy. AI tools are now enabling insurance companies to develop proprietary software internally, reducing reliance on external vendors and potentially decreasing costs.

• Insurers face new underwriting challenges with AI-enabled data centers.
• InsurTech investment concentration may limit diversity among tech providers.
• The balance between internal software development and external acquisitions is crucial for competitive advantage.
• Industry maturity is indicated by the shift of talent from InsurTech startups to traditional insurers.

This report highlights the numerous transformations within the insurance sector as AI technologies evolve rapidly. Insurers must continue to adapt and innovate to seize emerging opportunities while managing novel risks. The industry's future competitive edge will depend increasingly on specialized skills and effective technology application rather than mere access to cutting-edge AI solutions.