P&C Specialist: Insurers, VCs Return to Insurtech Financing with Sharp Focus

The rebound is marked by a wave of investment in AI-powered platforms, especially in the P&C space, as more insurers look for practical ways to automate, improve and compete. By Varada Bhat, Vrushank Nayak | June 25, 2025 Insurtech startups are getting a second wind as insurers and venture capitalists open their checkbooks again, this time with a sharp focus on AI and clear expectations of profitability. After several quarters of stagnant growth and investor fatigue, the sector showed signs of rebound, according to Pitchbook's Q1 2025 global insurtech report. Funding for insurtech companies in the P&C industry doubled to $400 million in the first quarter, compared with the year-ago period, according to Pitchbook. "Along with the whole insurtech space, P&C attracted increased VC funding in Q1, headlined by a $193 million later-stage deal for Openly," said Ben Riccio, associate analyst, industry and technology research at Pitchbook. Openly is a home insurance startup. Insurtech deal flow plummeted in 2023, and the slump continued through 2024, when funding dropped to nearly $700 million from nearly $1.6 billion in 2023 amid investor caution and a slowdown in mega-rounds. But with the Q1 rebound, analysts are pointing to a possible "insurtech spring," as signs emerge of a more sustainable and tech-driven transformation taking hold across the P&C sector. Insurers, buoyed by improved underwriting results, are zeroing in on startups that marry advanced analytics and AI with clear business outcomes. "Carriers were so busy just raising rates to survive that until recently, they didn't have the bandwidth to engage deeply with insurtechs," said Martin Ellingsworth, president of SaltCreek Analytics. "Now the forward-looking momentum and current profitability are changing the chemistry of investment decisions." The U.S. P&C industry posted a $22.9 billion net underwriting gain last year, reversing a $21.3 billion loss in 2023, according to AM Best. That shift is restoring confidence in the sector's ability to invest.

Streamlining and enhancing

Recent fundraising rounds suggest that executives and investors are now backing technology that streamlines operations and enhances underwriting and claims. 

Clearspeed, a voice-based risk-assessment technology firm, today announced that it secured $60 million in Series D funding, bringing the company's total funding to $110 million. The round was led by Align Private Capital, with participation from IronGate Capital Advisors, Bravo Victor Venture Capital and KBW Ventures.

On Tuesday, E&S-focused insurtech Ledgebrook raised $65 million in a Series C round led by the Stephens Group, American Family Ventures and other investors. And last week, Pano AI, a wildfire-detection startup that uses artificial intelligence to monitor and predict fire threats in real time, secured $44 million in Series B funding, which included Liberty Mutual Strategic Ventures and Tokio Marine's venture fund as investors.

AI investment leads

Artificial intelligence continues to dominate investor interest. Nearly 61% of insurtech deal volume in the first quarter went to AI-centered startups, Gallagher Re reported.

"There's absolute proof that robotic processes and automation can cut costs on repeatable tasks — policy issuance, document handling, claims triage," SaltCreek's Ellingsworth said. "But AI is also helping carriers do things better, not just cheaper. We're seeing big investments in predictive analytics, segmentation, pricing models and sensor-driven decisioning."

The urgency is showing up in the C-suite.

"There's nothing like being a 'fast follower' when it comes to AI — you're already late," said Juan Andrade, CEO of USAA, at the Insurtech Insights conference in New York earlier this month. "What's really exciting is the speed and scale of AI." Andrade highlighted how the technology has materially improved catastrophe response. "In claims management, AI has allowed us to reduce the average time to pay after a wildfire or hurricane from 14 days to just seven." 

Successful adoption isn't just about tools, Andrade said. "Employee education is one of the most critical elements for sustainable implementation," he said.

C-suites are empowered to drive AI implementation, said Alan Demers, founder of InsurTech Consulting.

"In the early 2010s, it was chaos. Too many vendors, too little differentiation. Now, it's more focused. Carriers are being more strategic about who they partner with and why," said Demers, former head of claims innovation at Nationwide.

This article was originally published by P&C Specialist

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