Sector Snapshot: Insurtech Funding Is Way Down, But AI Is Still Driving Some Big Deals

Insurtech Funding Declines in 2025

As of 2025, funding for insurtech startups has seen a significant drop, amounting to approximately $3.9 billion in financing from seed to growth stages. This figure represents nearly one-fourth of the peak funding levels reached in 2021, according to Crunchbase data.

Fewer Deals at Bigger Sizes

Alongside the decreased funding volume, the number of deals has also declined. This trend suggests a possible reduction in investor interest in the insurtech sector. Interestingly, while fewer deals are being made, the average size of these rounds appears to be increasing. This juxtaposition could indicate that investors are opting to place larger bets on fewer startups in a tightening market.

The Role of AI

Despite the overall downturn in funding, artificial intelligence remains a bright spot within the insurtech landscape. Companies leveraging AI technology are still managing to secure notable investments, underscoring a persistent interest in innovative solutions that enhance operational efficiency or improve customer experiences.

Who Is Affected?

This funding decline impacts a variety of stakeholders, including insurtech startups, investors, and the broader insurance industry. Startups may face challenges in scaling their operations or bringing new products to market without the robust funding they enjoyed in prior years. Investors might be reassessing their strategies in light of current market conditions, while traditional insurers could find themselves competing with a more selective and potentially more powerful wave of tech-driven startups.

Overall, while the current state of insurtech funding is less vibrant than in previous years, the continued emphasis on AI solutions suggests that there are still opportunities for innovation and growth within the industry.

Original Source: https://news.crunchbase.com/venture/sector-snapshot-insurtech-funding-down-ai-deals/