As the insurance industry continues its digital transformation, venture capital in insurtech remains a positive contributor amid broader market volatility.
PitchBook‘s Q2 2025 Insurtech VC Trends update, released this month, offers a snapshot of the sector’s pulse through mostly the first half of this year.
Drawing from global data, the PitchBook report highlights a maturing ecosystem grappling with economic headwinds yet showing signs of renewed vigor in exits and valuations.
With contributions from analysts Ben Riccio and Matthew Nacionales, this preview underscores how insurtech—spanning categories like Distribution & Intermediation, Property & Casualty, Health & Life, Commercial, Administration & Claims, and Underwriting—is adapting to AI-driven efficiencies and regulatory shifts.
Historically, insurtech funding has ridden waves of hype and caution.
From 2015 to 2021, deal activity surged, peaking at $16.6 billion across 875 deals in 2021—a banner year fueled by low interest rates and pandemic-accelerated digitization.
Deal values climbed from $1.5 billion in 2015 to that lofty summit, with counts ballooning from 269 to 875. However, the 2022-2024 cooldown reflected macroeconomic pressures: inflation, rising rates, and geopolitical tensions.
Funding dipped to $9.3 billion in 2022 (742 deals), $5.8 billion in 2023 (551 deals), and $4.9 billion in 2024 (477 deals).
Fast-forward to Q2 2025, and the year-to-date tally stands at $2.6 billion over 244 deals—on pace for a modest uptick from 2024 but still below pre-2022 norms.
This tempered deal flow masks pockets of optimism. Quarterly breakdowns from 2020 onward reveal seasonal ebbs and flows, with Q1-Q2 2025 showing steadier activity than the erratic 2022 quarters.
Investors are prioritizing scalable models, particularly in AI-enhanced underwriting and claims processing, which promise cost savings in an era of climate risks and cyber threats.
The report notes a shift toward later-stage deals, where established players secure larger rounds to expand globally.
Exits, long a pain point in insurtech, are flashing green.
Cumulative exit value from 2015-2025 totals over $66 billion, but 2025’s first half alone delivered $6.2 billion across 30 exits—outpacing full-year 2024’s $1.3 billion (39 exits) and signaling improved liquidity.
The 2021 peak of $38.8 billion (57 exits) remains the gold standard, driven by SPACs and mega-IPOs like those of Lemonade and Hippo.
Recent activity includes trade sales to incumbents hungry for tech bolt-ons, with quarterly charts illustrating a Q2 spike in M&A.
This rebound bodes well for limited partners seeking returns, potentially unlocking dry powder for riskier early bets.Valuations tell a story of pragmatism.
Median pre-money valuations for pre-seed/seed stages have stabilized post-2021 froth.
In Administration & Claims, they rose from $4.7 million in 2021 to $11.8 million in 2025, reflecting demand for automation tools.
Commercial segments saw peaks at $13.9 million in 2023, while Distribution & Intermediation hit $14.9 million in 2024.
Deal sizes mirror this: pre-seed/seed medians range from $1.0 million (Administration & Claims, 2021) to $4.6 million (Commercial, 2024).
Early-stage trends are similar, with Health & Life valuations climbing from $3.5 million in 2020 amid telehealth synergies.
Overall, down rounds have waned, but investors demand clearer paths to profitability.
Sectorally, Property & Casualty dominates deal share, buoyed by parametric insurance for disasters, while Health & Life gains from wellness tech.
Notable Q2 deals include a $150 million Series C for an AI claims platform in Administration & Claims and a $75 million round for a climate-focused P&C underwriter.
Emerging trends?
Embedded insurance via fintech partnerships and blockchain for fraud detection, with forecasts eyeing 10-15% YoY growth if rates ease.
Challenges persist: Regulatory scrutiny in Europe and talent shortages in data science.
Yet, as PitchBook concludes, insurtech’s $2.6 billion YTD funding—coupled with steady exits—positions it for a 2026 comeback.