Gallagher Re says the $US15 billion ($26 billion) spent by insurance businesses on AI-related technologies since 2012 casts doubt on whether the industry is adequately investing in “once-in-a-generation technology that is ignored at our peril”.

AI projects represent a quarter of the $US60.8 billion ($93.3 billion) raised by insurtechs since Gallagher Re began tracking deals.

“It is worth asking whether the insurance industry is investing sufficiently in innovation," the broker’s global head of insurtech Andrew Johnston said.

“This is especially urgent given the rise of artificial intelligence, where vast sums are now being deployed.

“Our industry is undoubtedly committing to AI, but it should increase its focus, if anything.”

Global insurtech funding totalled $US1.09 billion ($1.67 billion) in the second quarter, down 17% from January-March, with 57% of deals involving AI-centred companies.  

The average size of the 91 deals was $US12.83 million ($19.68 million), down 19%.

Property and casualty insurtechs raised $US362.22 million ($555.39 million), the lowest sum since the first quarter of 2018 and down 68% on the first quarter.

Early stage insurtechs raised $US259.7 million ($398.31 million), rebounding from the prior quarter’s nearly five-year funding low.  

US insurtechs’ deal share increased to 60%, a nine-year high. The quarter’s four largest deals involved Gravie on $US144 million ($220.98 million), Bestow at $US120 million ($184.15 million), Chapter on $US75 million ($115.09 million) and Empathy at $US72 million ($110.48 million).

Mr Johnston says the past three years have “produced substantially higher-quality insurtech businesses”, and Silicon Valley’s global share of insurtech equity deals has nearly doubled in an increasingly competitive funding environment.  

“Insurtech companies are rushing to build leading AI solutions, and Silicon Valley has a second-to-none tech talent pool that can move quickly.

“This, coupled with a renewed sense of optimism around what AI can deliver in financial returns for investors, could well open the door for the sort of funding volumes we observed in 2020 and 2021.” 

See the report here.