The insurance industry is undergoing a seismic shift, driven by the integration of artificial intelligence and digital technologies.
The Global InsurTech Report for Q2 2025, released by Gallagher Re, provides a comprehensive analysis of these trends, focusing on AI’s transformative impact on property insurance, InsurTech funding dynamics, and the broader evolution of the sector.
Released on August 7, 2025, this report highlights how InsurTechs are reshaping the industry by enhancing product development, risk prediction, and loss mitigation, particularly in response to weather and climate-related perils.
The report underscores AI’s pivotal role in property insurance, one of the largest premium-generating sectors.
With the global property insurance market projected to grow at a compound annual growth rate (CAGR) of over 8% from 2024 to 2028, according to GlobalData, AI is enabling insurers to refine underwriting processes, improve pricing accuracy, and mitigate risks associated with escalating weather events.
InsurTechs are collaborating with incumbent carriers to develop advanced property insurance products, leveraging AI to predict and manage perils like storms, floods, and wildfires.
These technologies help insurers better understand loss drivers, offering tools to forecast risks and implement preventive measures, ultimately reducing claims and enhancing profitability.
The report emphasizes that AI’s ability to process vast datasets allows for real-time risk assessment, enabling insurers to offer tailored coverage and respond proactively to emerging threats.
A significant milestone highlighted in the Q2 2025 report is the InsurTech sector’s cumulative funding, which surpassed USD60 billion since tracking began in 2012.
This achievement underscores the transformative impact of InsurTech on the insurance industry and the confidence investors have in technology-driven solutions.
Approximately USD15 billion, or 25% of this total, has been directed toward AI-related technologies, reflecting the sector’s growing reliance on AI to drive advancements.
However, the report notes a 16.7% quarter-on-quarter decline in global InsurTech funding, dropping to USD1.09 billion in Q2 2025—the lowest level for property and casualty (P&C) InsurTechs since Q1 2018.
Despite this dip, early-stage InsurTechs showed resilience, raising USD259.7 million, a rebound from the previous quarter’s five-year low.
The average deal size also fell by 18.7% to USD12.83 million, with deal counts decreasing by 6.2% to 91.
Notably, 57.1% of InsurTech deals in Q2 2025 were AI-centered, highlighting the technology’s dominance in attracting investment.
The report also examines property-focused InsurTechs, which raised USD191.12 million in Q2 2025, reflecting their critical role in addressing the rising loss trends driven by climate-related events.
These firms are developing solutions to improve risk modeling and enhance resilience against natural disasters, such as hurricanes and wildfires, which have become more frequent and severe.
By integrating AI, InsurTechs are helping insurers not only predict losses but also implement mitigation strategies, such as reinforcing infrastructure or adjusting policy terms to reflect real-time risk profiles.
This focus on proactive risk management aligns with the industry’s broader shift toward sustainability and resilience in the face of climate change.
Despite the promising advancements, challenges remain.
The “black box” nature of AI algorithms raises concerns about transparency and potential biases, which could undermine trust in automated decision-making.
Regulatory frameworks, such as the European Artificial Intelligence Act effective August 1, 2024, are beginning to address these issues by imposing risk-based guidelines on AI applications.
The report suggests that similar regulations may emerge in other regions, including the U.S., where state regulators are expected to shape AI’s use in insurance.
Navigating this evolving regulatory landscape will be critical for InsurTechs and insurers to maintain compliance while maximizing AI’s benefits.
The Global InsurTech Report Q2 2025 paints a picture of an industry at a crossroads, where AI-driven advancement is unlocking new opportunities while posing complex challenges.
As InsurTechs continue to attract significant investment and forge partnerships with traditional carriers, their role in transforming property insurance is significant.
By leveraging AI to enhance risk prediction, streamline underwriting, and mitigate losses, the sector is poised to drive sustainable growth and resilience in an increasingly volatile environment.
For insurers and reinsurers, the report serves as a call to action: embrace AI strategically to stay competitive in an evolving market.