Gallagher Re published its Q1 2026 Global InsurTech Report on May 7, 2026. AI-focused startups took 95.2% of all InsurTech venture capital, $1.55 billion across 68 deals, and every one of the quarter's ten largest deals went to an AI company. Andrew Johnston, the firm's Global Head of InsurTech, drew the conclusion plainly: AI and InsurTech are now almost synonymous. What the share figure does not show is who stopped writing checks.

Key Takeaways

  • 95.2% of Q1 2026 InsurTech funding went to AI-focused firms, up from 77.9% in Q4 2025, on total funding of $1.63 billion against $1.67 billion the prior quarter.
  • Average early-stage deal size reached $14.06 million, up 278.8% year over year, while CB Insights put total deal count at 81, the lowest since Q2 2016.
  • Only four insurance corporate venture arms invested in the quarter, matching a count last seen in Q4 2017, at a time when CVC-backed InsurTechs score 545 on Mosaic against 422 for the rest.
  • Life and Health funding nearly doubled to $718.99 million while P&C fell 31% to $907.14 million, reversing the 2025 pattern.
  • $444.84 million went to AI liability and cyber firms in one quarter, 7.7% of everything raised in that category since 2012.

The Concentration, and the Base It Sits On

Total funding of $1.63 billion was marginally down from $1.67 billion, but the two quarters together are the strongest consecutive pair since Q3 2022. Johnston described it as bucking a three-year run of roughly $1 billion quarters.

Metric Q1 2026 Q4 2025 Change
Total InsurTech funding $1.63B $1.67B -2.4%
AI-focused firm share 95.2% 77.9% +17.3 pp
AI-focused firm funding $1.55B n/a n/a
AI deal count 68 n/a n/a
Average AI deal size $25.79M $22.14M +16.5%
Top 10 deals to AI firms 10 of 10 n/a Record

The historical base makes the concentration legible. InsurTech funding peaked at $15.8 billion in 2021, fell 55% to $7.1 billion in 2022, slid through 2023 at $4.5 billion and 2024 at $4.25 billion, then posted its first annual increase since 2021 at $5.08 billion in 2025, up 19.5%. Cumulative investment through mid-2025 reached roughly $60 billion globally, of which about $15 billion went to AI-focused firms.

Moving from 77.9% to 95.2% in one quarter crosses a definitional threshold rather than an incremental one. When nineteen of every twenty venture dollars go to AI companies, the InsurTech label and insurance AI are the same category for capital allocation purposes.

The sector mix moved underneath it. Life and Health funding nearly doubled quarter over quarter to $718.99 million while P&C fell 31% to $907.14 million, reversing 2025, when P&C rose 34.9% to $3.49 billion and L&H slipped 4.6% to $1.59 billion.

Fewer Bets, Larger Checks, and One Absent Investor

The concentration is not only across sectors. It is across the number of people writing checks at all.

Average early-stage deal size reached $14.06 million, up 278.8% year over year, the highest since Q3 2022, on total early-stage funding of $548.50 million. CB Insights sees the same structure from the other side: median deal size climbed to $10.0 million, nearly double the $5.3 million peak of the 2021 boom, while deal count fell to 81, the lowest since Q2 2016 when 67 deals closed.

The investor pool thinned to match. The count of investors making four or more equity investments hit a nine-year low in 2025, and global active investors fell to their lowest since Q3 2020. Only four insurance corporate venture arms invested in Q1 2026, American Family Ventures, Intact Ventures, Optum Ventures and Sancor Seguros Ventures, matching a count last seen in Q4 2017.

That last figure is the one with an operational consequence for carriers. CVC-backed InsurTechs carry an average Mosaic Score of 545 out of 1,000 against 422 for non-CVC companies, 29% higher. More to the point, an insurer that invests alongside a vendor gets governance visibility, strategic alignment and early sight of the roadmap. An insurer that does not meets the same vendor as a customer, after the product is built.

That gap sits directly on top of the third-party model oversight carriers are now required to perform. A carrier that must document a vendor's training data, testing methodology, known limitations and change-management practice is doing it from outside the cap table, on whatever the vendor chooses to disclose, in a market where the vendors are larger and better funded than the last time most carriers surveyed it. Chief actuaries at life and health carriers who assessed the vendor pool in 2024 are looking at a materially different one after a quarter that nearly doubled L&H funding.

The Exposure Nobody Is Funding Against

The category attracting capital and the category accumulating loss are not the same category.

AI liability and cyber firms raised $444.84 million in Q1 2026, which is 7.7% of the $5.77 billion raised across 263 deals in that category since 2012, arriving in a single quarter. Standalone writers now include Munich Re, Corgi, Armilla, Mayflower Specialty and Embroker at limits from $2 million to $50 million.

Freddie Scarratt, Gallagher Re's Global Deputy Head of InsurTech, named the exposure that sits outside all of it: the accumulation of silent AI risk, which he described as a fundamental threat to underwriting discipline, creating a scenario where insurers provide accidental capacity for complex, high-stakes events they have neither modeled nor priced.

For a reserving actuary that is a development problem before it is a coverage problem. If AI model failures generate claims under general liability, professional liability and technology E&O policies written without AI exposure in the pricing, the development on those lines diverges from history in ways standard methods will not separate until the claims mature. The signal arrives as unexplained adverse development on familiar lines, not as a new claim type.

The Verisk ISO generative AI exclusion is the market's attempt to cut that exposure out of the affirmative book, and adoption remains uneven across carriers and lines. Until it is not, the affirmative market is being capitalized at a few hundred million a quarter while the silent book is the whole of commercial liability.

Further Reading

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