PE & VC Investment Trends in InsurTech

The InsurTech sector has experienced significant growth in funding over the past decade, driven by increasing innovation, digital transformation, and investor interest in technology-driven insurance solutions.

April 02, 2025 • Estimated Reading Time: 11 minutes

Overview 

The InsurTech sector has experienced significant growth in funding over the past decade, driven by increasing innovation, digital transformation, and investor interest in technology-driven insurance solutions. However, the funding landscape has also shown periods of volatility, with a notable peak in 2021 followed by a decline in subsequent years.

Growth Trajectory: 2012-2021

Between 2012 and 2021, InsurTech funding demonstrated a strong upward trajectory. In 2012, the sector attracted $348 million in investments, followed by fluctuating but generally rising levels of funding over the next several years. By 2018, total funding had reached $4.16 billion, and in 2019 and 2020, investment levels continued to surge, reaching $6.34 billion and $7.10 billion, respectively.

The most significant funding spike occurred in 2021, when InsurTech investments skyrocketed to an all-time high of $15.799 billion. This increase from earlier years reflected heightened investor confidence, a surge in digital adoption due to the COVID-19 pandemic, and increased M&A and IPO activity within the sector. Many startups secured record-breaking funding rounds, reflecting a bullish sentiment toward the potential of InsurTech solutions to disrupt traditional insurance models.

Market Correction and Decline: 2022-2024 

Following the 2021 peak, InsurTech funding entered a correction phase. In 2022, total funding dropped to ~$7.10 billion, marking a significant decline from the previous year. The downward trend continued into 2023 and 2024, with funding levels decreasing to $4.50 billion and $4.25 billion, respectively.

This decline can be attributed to multiple factors, including:

  • Market Saturation: A growing number of InsurTech startups entered the market, leading to increased competition and investor selectivity.

  • Macroeconomic Conditions: Rising interest rates, inflation, and overall economic uncertainty led to a more cautious investment climate.

  • Investor Caution: Following the rapid growth in 2021, investors began to shift focus toward sustainable growth, profitability, and market consolidation, reducing the availability of venture capital for early-stage companies.

Outlook and Key Takeaways 

While the decline in funding post-2021 indicates a cooling-off period, the InsurTech sector remains a key area of innovation within the insurance industry. Future funding is expected to focus on:

  • Sustainable Business Models: Investors are likely to prioritize startups with clear paths to profitability rather than those focused solely on rapid expansion.

  • AI and Automation: Technologies such as artificial intelligence, predictive analytics, and process automation continue to attract investment as insurers seek to improve efficiency and customer experience.

  • Regulatory Adaptation: Startups that align with evolving regulatory requirements and compliance frameworks are expected to gain stronger investor support.

Venture Capital in InsurTech: Startup booster

B2B SaaS Share of InsurTech VC Funding: 2016-2024

The share of B2B SaaS in InsurTech venture capital (VC) funding has seen a notable increase from 2016 to 2024, indicating a shift in investor focus towards technology-driven solutions in the insurance sector. In 2016, B2B SaaS accounted for only 19% of total InsurTech VC funding, while the remaining 81% went to other segments. However, by 2024, the share of B2B SaaS had risen significantly to 43%, demonstrating strong growth and investor confidence in the scalability and efficiency of SaaS-based insurance solutions.

Between 2017 and 2023, B2B SaaS funding experienced steady gains, rising to 30% in 2017, 31% in 2018, and then slightly declining to 19% in 2019 before resuming an upward trajectory. By 2021, SaaS funding had reached 26%, followed by a continued increase to 29% in 2022 and 32% in 2023. The most significant growth occurred in 2024, when the share jumped to 43%, reflecting a broader industry trend toward digital transformation and cloud-based insurance solutions.

This increase highlights the growing demand for B2B SaaS platforms in the insurance industry, as companies seek automation, AI-driven analytics, and more efficient customer engagement tools. The trend suggests that investors are increasingly favoring software-based solutions that can streamline operations and enhance policy management, underwriting, and claims processing.

With the continued digitalization of insurance services, the role of B2B SaaS in InsurTech is expected to expand further, offering promising opportunities for startups and established players alike.

From Small to Medium sized startups in InsurTech

  1. TOP 10 Investors in Global InsurTech Startups in Seed Rounds

The Seed round investment landscape in InsurTech has been dominated by key investors who play a significant role in nurturing early-stage startups. Plug and Play leads the ranking with 54 investments between 2019 and 2024, followed by Anthemis Group with 46 investments. Insurtech Gateway also remains an active player with 34 investments. While early-stage investment slowed down in 2023-2024, some investors continued to deploy capital selectively, with Plug and Play making six investments and Insurtech Gateway adding seven more. Other notable investors include 500 Global and Global Founders Capital, both of which have participated in over 20 seed rounds since 2019. This data underscores the strong foundational support provided by these investors in shaping the next wave of InsurTech startups.

  1. TOP 10 Investors in Global InsurTech Startups in Series A

Series A funding rounds in InsurTech highlight a group of investors with a strong focus on scaling promising startups. MS&AD Ventures has emerged as the top Series A investor, backing 35 companies from 2019 to 2024, with five of those investments occurring in 2023-2024. MassMutual Ventures and Munich Re Ventures closely follow, having invested in 25 and 24 startups, respectively, over the same period. Other notable firms include IA Capital Group, MTech Capital, and American Family Ventures, each of which has contributed significantly to funding early-scale startups. The presence of institutional investors such as Greycroft Partners and Lightspeed Venture Partners further demonstrates the growing confidence in InsurTech innovations. Despite a slowdown in recent years, these investors continue to be critical drivers in the growth and maturity of emerging companies.

  1. TOP 10 Investors in Global InsurTech Startups in Series B

At the Series B stage, InsurTech startups receive funding to scale their operations, expand into new markets, and refine their technology. Mundi Ventures leads the pack with 37 investments between 2019 and 2024, with 10 of those occurring in 2023-2024. Aquiline Capital Partners and Brewer Lane Ventures follow with 16 and 15 investments, respectively. Insight Partners and Bessemer Venture Partners also play a crucial role, having invested in multiple late-stage startups. SCOR, SoftBank, and Cathay Innovation each contributed 12 rounds, reinforcing the growing interest of institutional and strategic investors in the InsurTech sector. While the number of investments in 2023-2024 is lower than in previous years, the continued presence of high-profile investors signals confidence in the long-term potential of the sector.

AI in Insurance: the new InsurTech Rule

The Role of AI in the Insurance Industry

Artificial Intelligence (AI) is transforming the insurance industry, reshaping how companies manage risk, optimize operations, and enhance customer interactions. Insurers are leveraging AI-powered solutions to improve underwriting accuracy, fraud detection, claims processing, and customer service. AI’s ability to process large volumes of data, recognize patterns, and make informed predictions is driving efficiency and cost savings while also improving policyholder experiences.

AI Use Cases in Insurance

The integration of AI in insurance spans multiple business functions, from distribution to claims management. The following insights, derived from the first chart, categorize AI applications based on their impact on the industry:

1. High-Impact AI Applications

  • Distribution: AI is embedded in customer management software (CMS), allowing for lifetime customer value modeling to refine pricing and offerings.

  • Risk Management: AI enhances risk selection and pricing, monitors emerging risks, and leverages AI-based benchmarking for actuarial insights.

  • Business Operations: AI is utilized for intelligent search capabilities, content creation, and contractual analysis to streamline internal workflows.

  • Claims Processing: AI-driven fraud detection and claim analysis improve accuracy and reduce financial losses due to fraudulent claims.

2. Medium-Impact AI Applications

  • AI-driven chatbots using large language models (LLMs) enhance customer service and cross-selling opportunities.

  • Cyber and AI-based insurance coverages address emerging risks in digital security and compliance.

  • Customized generative AI models support internal content management and governance within insurance firms.

  • Claim adjustment and assessment benefit from AI-enhanced automation to accelerate resolution times.

3. Watchlist AI Applications (Emerging Technologies)

  • Machine learning (ML) in risk assessment is evolving to provide more granular segmentation in underwriting.

  • Early artificial general intelligence (AGI) applications, such as actuarial automation, could reshape forecasting models.

  • AI policy and governance, including intellectual property and AI legislation, is an area of regulatory focus.

  • Growing sophistication of fraud and cybercrime necessitates ongoing AI advancements in fraud prevention.

Applicability of AI in (Re)Insurance Claims

The second chart highlights the applicability of AI technologies in reinsurance and insurance claims, ranking AI-driven solutions by their effectiveness:

  1. Text Analytics & Image Recognition – These AI tools are the most widely applicable, supporting claims analysis, fraud detection, and automated document processing.

  2. Large Language Models (LLMs) & Chatbots – LLMs facilitate claims-related inquiries and policyholder interactions, improving efficiency.

  3. Machine Learning (ML) & Natural Language (NL) Generation – These technologies drive automation in underwriting, claims verification, and data extraction.

  4. Decision Management & Automation – AI-driven decision-making systems streamline claims approval processes.

  5. Speech Recognition & Digital Assistants – Virtual assistants enhance customer experience by handling queries efficiently.

  6. Advanced and Predictive Analytics – AI-powered analytics refine risk assessment and fraud prediction.

  7. Deep Learning & Data Classification – Used for processing structured and unstructured data for more accurate claims adjudication.

  8. Biometrics & Search Engines – Biometrics enhance identity verification, while AI-powered search engines optimize document retrieval.

  9. Robotics – AI-enabled robotics is an emerging field, primarily in process automation for claims handling and policy management.

Conclusion

The InsurTech sector has undergone a dynamic evolution over the past decade, marked by rapid funding growth, market corrections, and an increasing shift towards sustainable business models. The peak in 2021 highlighted the strong investor enthusiasm for digital transformation in insurance, but the subsequent decline in funding from 2022 to 2024 signals a more cautious and selective investment landscape.

Despite this pullback, the sector remains a crucial driver of innovation in the insurance industry. The increasing share of B2B SaaS solutions in InsurTech funding demonstrates a clear trend toward efficiency-driven, technology-based solutions that enhance automation, risk assessment, and customer experience. Additionally, AI continues to be a transformative force, revolutionizing underwriting, claims processing, and fraud detection.

Investor sentiment has shifted toward profitability and long-term value creation, favoring startups that demonstrate strong fundamentals, regulatory adaptability, and clear monetization strategies. While early-stage funding has slowed, key investors continue to support InsurTech companies at various stages, reinforcing confidence in the sector’s future potential.

Looking ahead, the industry’s trajectory will depend on how well startups and incumbents navigate macroeconomic challenges, regulatory shifts, and technological advancements. With sustained innovation and strategic capital deployment, InsurTech is poised to remain a pivotal force in reshaping the global insurance landscape.

Sources & References

Beinsure. (2025). Insurtech Funding in 2024: Stabilization Trends, Insights & Key Drivers. https://beinsure.com/insurtech-funding-trends-insights/ 

Bocconi Students Investment Club. (2025). Private Equity’s Growing Influence in the Insurance Industry. https://bsic.it/wp-content/uploads/2025/02/Private-Equity_s-Growing-Influence-in-the-Insurance-Industry-1.pdf 

Gallagher. (2025). Global InsurTech Report. The role of AI in the (re) Insurance Industry. https://www.ajg.com/gallagherre/-/media/files/gallagher/gallagherre/news-and-insights/2025/february/gallagherre-global-insurtech-report-q4.pdf 

Property casualty 360. (2025). Insurtech Outlook 2025: What’s ahead for carriers and MGAs? https://www.propertycasualty360.com/2025/01/06/insurtech-outlook-2025-whats-ahead-for-carriers-and-mgas/?slreturn=20250312145033