Insurtech startups face squeeze as insurers build AI

Aviva Chubb and MetLife are developing artificial intelligence capabilities in-house.

Insurers risk falling behind in 2026 as artificial intelligence moves from testing to practical use.

CB Insights says major insurers, including Aviva, Chubb and MetLife, are building AI capabilities in-house. 

This is putting pressure on insurtech start-ups to prove they can deliver clear commercial value, according to a CB Insights report.

CB Insights said investors are also becoming more selective. In 2025, the number of investors making four or more insurtech investments fell to its lowest level since 2017. 

Those still active are focusing more on mature companies with stronger signs of growth.

AI implementation is becoming a key requirement. Amongst the fastest-growing agentic AI-focused insurtechs, 7 of the top 9 are hiring for implementation-focused roles. 

These jobs are aimed at helping insurers and intermediaries put AI tools into use, rather than keeping them at the pilot stage.

Early-stage funding also appears weaker in insurtech than in the wider venture market. 

In Silicon Valley, only 18% of 2025 insurtech deals with Commercial Maturity data went to early-stage companies, compared with 51% across the broader venture market. In New York, the figure was 13%.

The report said median early-stage insurtech deal size fell from 2024 to 2025. Over the same period, early-stage deal sizes in the wider venture market rose 50% year on year.