Artificial intelligence is quickly reshaping the insurance landscape, and Gallagher Re’s global head of InsurTech, Andrew Johnston, warned in the company’s latest Global InsurTech Report that this trend shouldn’t be ignored.
“There remains some skepticism in reinsurance of just how impactful AI could be, but it is becoming clearer that this is a once in a generation technology that is ignored at our peril,” he said in a statement about the report.
That said, the report found that one of the benefits of some skepticism among InsurTechs is the pressure it has brought to remain profitable and sustainable.
“For three years now, we have observed a period that has produced substantially higher-quality InsurTech businesses,” the report said. “This improvement has not gone unnoticed in the traditional venture community.”
The InsurTech industry passed a milestone in the second quarter of 2025 with more than $60 billion raised and invested in InsurTech firms since Gallagher Re’s records began in 2012. While the number demonstrates InsurTech success in attracting capital, it pales in comparison to the amount being invested in artificial intelligence, Johnston wrote in the report. This is a trend that he sees as important for the industry to thrive.
“Our industry is undoubtedly committing to AI, but it should increase its focus, if anything,” he said.
According to a Stanford University study, $1.6 trillion has been invested globally in AI since 2013, including all private investments, public offerings and M&A deals. The report found that 57.1 percent of InsurTech deals went to AI-centered companies in second-quarter 2025.
Johnston said it’s the responsibility of InsurTechs to demonstrate the best uses for this technology to serve consumers and stay competitive.
The report also found a spike in traditional venture capital and private equity funding in the first quarter of 2025, with Silicon Valley investors driving one in five global InsurTech deals. This has contributed to an increasingly competitive funding environment, the report said.
“Perhaps most importantly, InsurTech companies are rushing to build leading AI solutions, and Silicon Valley has a second-to-none tech talent pool that can move quickly,” the report said. “This, coupled with a renewed sense of optimism around what AI can deliver (in financial returns for investors), could well open the door for the sort of funding volumes we observed in 2020 and 2021.”
The report said AI tools are becoming particularly important to InsurTechs and their investors as they can introduce new efficiencies and assist companies with repetitive, easily automated tasks.
“The human spirit and creativity are not what needs to be reimagined and reproduced—it is giving humans the time and space to do so that is critical,” the report said.
To fully embrace AI, InsurTechs need to commit to investing in robust data infrastructure that’s capable of handling vast datasets, as well as data governance frameworks, said Freddie Scarratt, global deputy head of InsurTech at Gallagher Re, in the report.
“Investing in AI talent—whether through hiring, training, or upskilling existing teams—will be crucial, as will forging partnerships with innovative InsurTech companies,” he said. “They need to be alert to the risks. AI has inherent challenges, and like any risk, this must be managed.”
He added that ethical considerations, such as ensuring fairness and avoiding bias in AI-driven underwriting or claims decisions, are crucial.
“Staying ahead of, and contributing to, the evolving regulatory landscape for AI in financial services is also essential,” he said.
This means continuing to share data, engage with academic institutions and research bodies, and help to develop industry-wide best practices for AI application, he said.
“Artificial Intelligence is not a panacea, nor will it entirely replace the deep expertise and judgment of human underwriters, actuaries, and claims professionals. Instead, it will become a powerful augmenting force, enhancing human capabilities and enabling more informed, efficient, and resilient decision-making,” he said.
“In the years to come, the adoption of AI will become a significant competitive differentiator for property reinsurers. Those that effectively integrate it into their core processes— from risk assessment and pricing to claims management and capital allocation—will gain an edge in a challenging market.”