Insurtech Review
FROM PROMISE TO PROOF:
Insurtech's AI Focus Shifting Toward the Need for Measurable Outcomes
In the past few years, there has been a trend of more moderate, yet calculated investments into insurtech – with both publicly traded and privately held firms prioritizing profitability over a “growth-at-all-costs” business model. In 2025, that same discipline remained, but the narrative moved from whether carriers and/or brokers would invest in technology – to how fast they could translate that investment into concrete operating results.
Today, AI continues to be a significant technology talk track, but the more interesting theme is the growing expectation (and pressure) to issue real results rather than more press releases about further AI adoption. In other words, the industry’s patience for “AI theater” is thinning.
In 2025, there was $3.3B invested in U.S. insurtechs, across 323 deals – a 12% increase in deal value over 2024, but a 6% decrease in deal count.
The latest data shows a pattern of fewer deals but ones that carry a higher conviction. Gallagher Re reported $1.01B of global insurtech funding in Q3 2025 across 76 deals, which was the lowest deal count since Q2 2020, but the most striking detail was that 74.8% of Q3 2025 funding went to AI centered companies,1 underscoring how decisively AI became the insurtech funding magnet. This means that capital is available, but it’s increasingly “earned” and increasingly concentrated – particularly in AI-enabled technology.
THE KEY INSURTECH TRENDS
1 Funding continues across the insurance value chain
According to data compiled by Pitchbook and analyzed by MarshBerry, there are currently 4,400 active insurtech firms with numerous investments across the insurance value chain. Distribution has attracted more capital and has had more new starts than any of the other categories. While not a complete catalog of all firms, this graphic illustrates the impact of technology investment in the insurance industry.
2 “Agentic” tech: distribution remains dominant – and gets automated
In 2024, investments into distribution outpaced other categories, aligning with continued expansion of E&S and alternative placement. In 2025, that dominance both persisted and evolved. Distribution tech increasingly focused on automating the work itself: intake, submission, documentextraction, quoting and renewal remarketing. In 2025, the “how” began to become clearer as AI copilots and workflow agents moved from demos to targeted deployments in front-office and service teams – sometimes justifying headcount reduction.
3 Key insurance industry layoffs due to technology (2025 into early 2026)
2025 saw a number of announcements in which planned headcount reductions were attributed to technology adoption, including:
- Allianz announced plans to cut up to 1,800 jobs over the next 12 to 18 months, primarily in call centers, as AI replaces manual processes.2
- Acrisure announced plans to lay off approximately 400 employees in its accounting workforce in early 2026, citing advances in technology and automation.3
- Chubb said that it has considered reducing its workforce by up to 20% as part of a digitization drive.4
4 Legacy firms are catching up
Some of the larger, legacy companies – that had limited prior investment in technology – are accelerating their techstack and data capabilities. For example, in late 2025, WTW announced it will acquire San Francisco-based insurtech broker Newfront in a deal valued at approximately $1.3 billion. This deal gives WTW innovative technology and agentic AI capabilities that complement its recent technology, data and analytics investments and accelerate WTW’s technology strategy.5
5 Insurtech valuations
Public markets in 2025 broadly rewarded tech/AI narratives and profitable growth. S&P reports 2025 gains of approximately 16% for the S&P 500 and 26% for the Nasdaq Composite.
Insurtech Stock Performance
Source: S&P Capital IQ. Data as of 12/31/25.
Outlook for 2026
If 2025 was the year AI became the default funding theme (and default boardroom conversation), 2026 is set up as the year the market sorts out the promise from the proof. Which Insurtech companies are just delivering impressive demos and which are demonstrating justifiable investment by proving ROI – through measures such as expense ratio improvement, reduced transaction processing times, increased fraud detection, identification of profitable market opportunities, and better risk selection. The time is rapidly arriving for AI to move from initial tool rollout to actual workflow redesign.
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