Reinsurance broker Gallagher Re’s latest Global InsurTech Report found that global InsurTech funding fell 44.6% to $1.36 billion in Q3 2026 compared with the previous quarter, driven by a reduction in mega-round fundraising activity.
According to the report, $100 million+ mega-round funding declined to $660 million in Q3’26 from $1.67 billion in Q2’26, accounting for most of the overall decline in funding.
However, Gallagher Re noted that deal activity remained broadly stable, with 104 transactions completed in Q3 compared with 107 in the previous quarter, despite the headline slowdown.
During the quarter, AI-focused companies continued to dominate investment activity, attracting 83.2% of all InsurTech funding.
AI-focused businesses raised $1.13 billion across 72 deals, underlining the continued convergence of AI and insurance technology.
The report also found that early-stage funding increased 20.1% quarter on quarter to $317.3 million, bucking the wider funding trend.
US-based InsurTechs accounted for a record 64.4% of deals, with US investors representing 75.9% of the active InsurTech investor population.
In Q3’26, re/insurers backed 25 technology investments, although insurer-backed deal activity remained significantly below prior-year levels.
Andrew Johnston, Global Head of InsurTech at Gallagher Re, said, “The headline decline in funding tells only part of the story. Q2 was boosted by an unusually large concentration of mega-round transactions, so a moderation in Q3 was always possible.
“What the underlying numbers actually show is a market that remains remarkably resilient. Deal activity was broadly unchanged, early-stage funding recovered, and AI-focused companies continued to attract the overwhelming majority of available capital.
“The more important question is not whether funding is up or down in a particular quarter. It is whether InsurTechs are solving real business problems that insurers, reinsurers and their clients are prepared to pay for. In an increasingly competitive AI market, that matters more than ever.”
Alongside investment trends, the report also examined how AI is beginning to transform some of insurance’s most data-dependent classes of business: credit risk protection, trade finance insurance, financial protection and hedge insurance.
These classes have traditionally relied on fragmented financial, economic and behavioural data. The report argues that AI’s ability to analyse large volumes of structured and unstructured information simultaneously is creating opportunities to improve underwriting accuracy, risk monitoring and pricing sophistication.
Johnston added, “Some insurance classes have always been constrained by the quality, availability and timeliness of data. Credit insurance, trade finance and financial protection are all examples where underwriters have traditionally had to make decisions using incomplete information.
“AI creates the possibility of moving those markets from being primarily reactive to increasingly predictive. That does not remove the need for underwriting judgment, but it can give insurers a far richer understanding of risk and help them identify deterioration or opportunity much earlier than was previously possible.
“The firms creating the most value are not necessarily inventing entirely new products. Many are using AI to make long-established classes of business more accurate, more efficient and more scalable.”
