February 6, 2026
A thought leadership perspective on the convergence of artificial intelligence, market dynamics, and regional innovation reshaping commercial insurance
The insurance industry stands at a rare moment of transformation where technology, capital, and market forces converge to redefine decades-old operational models. Three interconnected trends signal that insurtech is entering a fundamental restructuring phase that North American leaders cannot afford to ignore.
In a striking reversal, New York has overtaken Silicon Valley as the leading hub for insurtech funding, with its share surging from 7% in 2023 to 15% in 2024, while Silicon Valley's share plummeted from 20% to 10%. In Q2 2025, Silicon Valley and New York combined accounted for nearly a quarter of all U.S. insurtech activity.
This isn't temporary—it represents a structural shift driven by New York's proximity to major insurance carriers, mature financial infrastructure, and access to insurance-specific expertise that Silicon Valley cannot easily replicate. The center of gravity for insurance innovation is moving closer to the heart of the industry itself, creating opportunities for deeper carrier partnerships, faster go-to-market cycles, and solutions built with operational realities in mind.
The commercial insurance market is splitting into distinctly different trajectories.
Property insurance rates declined 9% in Q3 2025, accelerating to a 4% decline in Q4, driven by abundant capacity, improved insurer profitability, and favorable reinsurance conditions. The U.S. P&C sector is projected to achieve a 94 combined ratio for full-year 2025—the best result in over 15 years.
Well-positioned risks are experiencing flat or declining renewals, while insurers offer enhanced policy terms and more flexible catastrophe deductibles to win business.
In stark contrast, casualty insurance rates increased 8% in Q3 2025, rising to 11% when excluding workers' compensation. Nuclear verdicts, rising auto repair costs for sophisticated vehicles, and emerging exposures like PFAS contamination and biometric data privacy are forcing carriers to raise rates and add exclusions. The umbrella/excess market faces particular strain, with some insurers limiting capacity to $10 million per risk and risk-adjusted rate increases averaging 16%.
This creates "a tale of two markets"—one where property conditions favor buyers, another where liability exposures demand sophisticated risk management and acceptance of rate increases.
AI isn't aspirational in insurance—it's delivering measurable results now.
AI-centered insurtechs captured 74.8% of all Q3 2025 funding across 49 deals, with P&C insurtech funding surging 90.5% quarter-over-quarter. In Q2 2025, 57.1% of all insurtech deals were AI-focused, totaling $582.72 million. This is strategic investment in platforms demonstrating clear ROI and competitive differentiation.
CCC Intelligent Solutions' Q3 2025 results provide a blueprint: 12% revenue growth to $267.1 million, 41% EBITDA margins, and a top-10 insurer increasing AI model usage from 15% to 40% of claims.
Industry-wide impact is equally impressive:
Approximately 51 reinsurance companies made tech investments in Q3 2025 alone, signaling that even the most conservative players recognize AI as essential infrastructure.
After boom-and-bust cycles, insurtech funding has stabilized. Seven of the past eleven quarters recorded funding within a 20% swing of the $1.1 billion mean, with Q3 2025 delivering $1.01 billion.
The quality shift is revealing:
Capital now flows to companies with proven traction, not just vision.
Digital channels now account for 25% of commercial insurance sales, driven by small business expectations for consumer-like experiences and broker technology enablement. The commercial sector—representing an estimated $9.8 billion of the $61 billion invested in insurtech since 2012—is where automation frees advisors to focus on complex, high-value risks.
Your advantages—underwriting expertise, distribution, brand trust—remain formidable but time-limited. Priorities should include selective insurtech partnerships focused on operational integration, in-house AI capability building, legacy system modernization, and distribution innovation meeting customers digitally and physically.
The era of funding on vision alone has ended. Success now requires demonstrable ROI, insurance domain expertise combined with technical capability, enterprise sales capability, strategic geographic positioning near industry hubs, and capital efficiency with clear paths to profitability.
You bridge carriers and clients, but this requires technology platform investments, vertical specialization where expertise justifies your role, data analytics capabilities helping clients quantify complex risks, and frameworks to identify truly valuable insurtech solutions.
This transformation particularly resonates in America due to:
Key trends to watch include market cyclicality normalization, AI regulation tightening across states, reinsurance capital shifts creating primary insurer leverage, embedded insurance growth through non-insurance platforms, climate risk recalibration despite 2025's quiet hurricane season, and intensifying talent competition for AI expertise.
The confluence of AI maturation, market bifurcation, and geographic realignment creates a window for decisive action. Companies that treated insurtech as experimental must now treat it as core operations. Those piloting AI need to move to production. Organizations relying solely on traditional distribution must build digital capabilities.
The inflection point is now. The opportunity is America's to seize.