Global insurtech funding hit $12.4 billion in 2025, making it the second-highest year on record behind 2021’s $15.8 billion peak. The figure comes from Gallagher Re’s annual Global InsurTech Report, which tracked 741 funding rounds across 58 countries. Unlike the 2021 boom, which was driven by speculative mega-rounds, the 2025 total was spread across more deals at more reasonable valuations, with a median round size of $14 million compared to $28 million in 2021.

Where the Funding Went

Property and casualty insurtech attracted 38% of total funding, or $4.7 billion. This category includes companies that sell homeowners, auto, and commercial insurance through digital channels. Lemonade, Hippo, and Root were early entrants; newer companies like Kin (focused on homeowners in climate-risk states) and Clearcover (auto insurance) raised significant rounds in 2025.

Health and life insurtech received $3.1 billion, or 25% of the total. Companies like Oscar Health, Clover Health, and Alan (in France) sell health insurance directly to consumers and small businesses. Ethos and Bestow sell life insurance online with instant underwriting. Fintech is reshaping the $300 trillion global financial services industry, and insurance is one of the largest and least digitized segments.

Insurance infrastructure and B2B insurtech received $2.9 billion, or 23% of the total. This category includes companies that sell technology to insurers rather than competing with them. Guidewire, Duck Creek, and Majesco provide core policy administration systems. Shift Technology and Tractable use AI for claims processing and fraud detection. Socotra and Novarica provide cloud-native infrastructure for insurance carriers. According to CB Insights, B2B insurtech had the highest year-over-year funding growth at 41%.

The Embedded Insurance Opportunity

Embedded insurance, where coverage is offered at the point of sale within a non-insurance product, is the fastest-growing distribution channel. When a consumer buys a flight on Kayak and is offered trip cancellation insurance, that is embedded insurance. When a Shopify merchant enables shipping insurance at checkout, that is embedded insurance.

The embedded insurance market was worth $72 billion in premiums in 2025, according to Swiss Re. It is projected to reach $500 billion by 2030. Companies like Bolttech, Cover Genius, and Qover provide the infrastructure that lets any company offer insurance within its own product. The global embedded finance market is forecast to reach $7 trillion by 2030, and embedded insurance is one of its most mature segments.

The conversion rates explain why embedded insurance is growing. A standalone insurance product marketed through email or digital advertising has a conversion rate of 1% to 3%. Insurance offered at the point of relevant purchase converts at 8% to 15%, per Cover Genius data. The context makes the product relevant, and the integration makes the purchase frictionless.

AI Is Changing Underwriting and Claims

Insurance is a data business, and AI is improving both sides of the data equation: pricing risk and processing claims. On the underwriting side, companies like Tractable use computer vision to assess vehicle damage from photos, reducing the time for auto damage estimates from days to minutes. Lemonade processes 30% of its claims automatically using AI, with payouts occurring in under three seconds for qualifying claims.

On the pricing side, parametric insurance, which pays out based on measurable events rather than assessed losses, is growing. FloodFlash pays automatically when water sensors detect flooding above a preset level. Descartes Underwriting sells parametric climate insurance to businesses. Arbol provides weather derivatives using satellite data. These products are only possible because AI can process satellite imagery, weather data, and IoT sensor readings in real time.

Fintech investment surpassed $210 billion in recent years, and insurtech is attracting a growing share as investors recognize that the global insurance market generates $7 trillion in annual premiums, offering a large addressable market for technology-driven products.

The Profitability Question

Insurtech companies that underwrite risk directly have struggled with profitability. Lemonade’s loss ratio (claims paid as a percentage of premiums collected) was 79% in 2025, improved from 90% in 2023 but still above the 60% to 65% range that traditional insurers target. Root reported a loss ratio of 73%. Oscar Health reached a loss ratio of 81%, though it was EBITDA positive for the first time.

The companies with the best economics are B2B insurtechs that sell technology rather than take risk. Guidewire reported $1 billion in annual recurring revenue with 75% gross margins. Duck Creek generated $380 million in revenue with a SaaS model. Shift Technology’s AI fraud detection platform is used by 100 insurers across 25 countries. Global fintech revenue is expected to grow at a 23% CAGR, and B2B insurtech revenue is growing even faster.

What Traditional Insurers Are Doing

Traditional insurers are not standing still. Munich Re, Zurich, and AXA have all established corporate venture arms that invest in insurtechs and integrate their technology. 75% of banks now collaborate with fintech startups, and the collaboration rate among insurers is catching up, reaching 62% in 2025, according to Willis Towers Watson.

State Farm invested in ADT and integrated home security data into its homeowners pricing. Allianz acquired a majority stake in digital insurer Friday. Zurich partnered with Cover Genius for embedded travel insurance across 60 countries.

Over 30,000 fintech companies operate worldwide, and approximately 3,800 of them are insurtechs. The $12.4 billion invested in 2025 signals that investors see insurance technology as a durable category, not a hype cycle. The premiums are real. The inefficiencies are documented. And the technology to fix them is now available.

Related Items:AI claims processing, embedded insurance, insurance technology, parametric insurance

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