Gallagher Re: AI projects capture 95% of Q1 insurtechs funding as sector rebound continues

Global insurance technology funding remained elevated in the first quarter of 2026, with artificial intelligence (AI) focused firms capturing more than 95% of all investment, according to Gallagher Re.

The broker’s latest “Global InsurTech Report” found the sector raised $1.63bn during the quarter, slightly below the $1.67bn recorded in Q4 2025 but still representing the strongest consecutive quarters since Q3 2022.

Gallagher Re said the figures suggest a sustained return of capital into the market following nearly three years of more subdued funding activity.

AI-labelled insurtechs dominated investment activity, securing 95.2% of total funding in Q1, the reinsurance intermediary said.

These firms raised $1.55bn across 68 deals, with an average deal size of $25.79m, above the broader InsurTech market average.

All of the quarter’s 10 largest funding rounds involved AI-centred businesses, Gallagher Re observed.

The report also identified a sharp rise in early-stage activity.

Funding for early-stage insurtechs increased 36.1% quarter-on-quarter to $548.5m, the highest level since Q3 2022.

Average early-stage deal sizes climbed 278.8% year-on-year to $14.06m.

Life and health insurtech funding nearly doubled from the previous quarter to $718.99m, driven by several large transactions.

Property and casualty insurtech funding declined 31% quarter-on-quarter to $907.14m, although average deal sizes remained stable at $20.2m.

“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 $1bn,” said Andrew Johnston, global head of insurtech at Gallagher Re.

“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,” Johnston said.

The report highlights the growing convergence between AI and insurtech, arguing that AI functionality is now becoming embedded across almost all new platforms and products entering the market.

Since 2012, insurtechs focused on digital and cyber risks have raised $5.77bn across 263 deals.

In Q1 2026 alone, companies operating in areas relevant to AI liability and cyber insurance raised $444.84m.

Gallagher Re said this reflects growing demand for products designed to address emerging AI-related exposures.

The broker’s 2026 report series will focus on the development of AI liability insurance and its convergence with cyber insurance markets.

The report describes AI liability insurance as cover intended to protect businesses from losses arising from AI systems, particularly in higher-risk sectors such as healthcare, finance and autonomous vehicles.

Potential exposures include algorithmic bias, data quality failures and liability stemming from AI-driven decisions.

Gallagher Re said these risks are already prompting insurers to develop new products, endorsements and exclusions tailored to AI-related exposures.

Johnston continued: “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.”

Freddie Scarratt, global deputy head of insurtech at Gallagher Re, added: “The speed of AI’s evolution is extraordinary, but it brings new risks alongside opportunities.”

He added: “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.”