Insurtech funding surged to a four-year high of $US2.44 billion ($3.47 billion) in April-June, driven by large venture capital and private equity-backed rounds.

AI-focused companies attracted 99% of funds across the quarter’s 107 deals, while early-stage funding declined 52%, Gallagher’s latest Global Insurtech Report says.

The broker’s global head of insurtech Andrew Johnston says capital availability “is clearly not a problem – funding is rebounding”, but money is going to a smaller number of innovators.

“There is a risk that despite the general recovery in fundraising we have witnessed in recent months, the industry may be facing a narrowing of its innovation pipeline,” he said.

On the workforce outlook, Mr Johnston says the industrial revolution created more jobs than were lost, and “if we take history as a guide, the AI boom should ultimately be job-creating. Some studies suggest that, in certain sectors, the internet has added 2.5 jobs for every job lost. We expect that AI will be no different.”

Recent AI models that allow people with minimal expertise to create software tools are “a potential boon for the insurance industry”, Gallagher Re says.

“For those who have a deep understanding of how insurance works, how agents bind business, how pricing decisions are made, how policy information is best extracted, how claims are paid etc, [a] new generation of AI-built software tools could be incredibly value- – and job – creating.

“Senior engineers will become even more valuable, because the use-specific tools ... will still require on-the-ground refinement and testing, monitoring and management.”

Mr Johnston adds that some insurtechs “may feel the AI hammer hit hard”, because “in some cases there are simply too many of them offering essentially the same thing”.

The report says AI data centres will require insurance during construction and throughout a multi-decade operational life, including classes such as cargo, cyber and property exposure, and business interruption from power and cooling failures.

“The AI boom is creating one of the largest new pools of insurable assets the industry has seen in decades,” Mr Johnston said. “The opportunity is enormous ... The winners will be those that can take a holistic view of the entire life cycle, from transporting the chips and equipment, through construction and commissioning, to live operations.”

See the report here.