Sabine VanderLinden, a keen observer of venture capital in insurance, recently wrote a startling sentence: "50% of every insurtech dollar invested in the first six months of 2026 went to companies that will never sell you a policy."
That number is a far cry from what proponents expected when the insurtech wave began a decade-plus ago. At that point, predictions were rife that some Big Tech company such as Google or Amazon would do a cannonball into insurance and change the game entirely or at least that some startup would figure out a way to leapfrog incumbent carriers and make them play catch-up.
But VanderLinden's analysis provides a guidepost about where investment in insurtechs is today and where I think it's going.
Let's have a look.
Artificial intelligence still takes up the vast majority of the headspace for most incumbents as they try to innovate. They're spending enormous effort to look for efficiencies in processing claims, in underwriting, in sales, and so on. They're also experimenting with ways to set up autonomous agents and to coordinate their actions while staying within crucial guardrails.
VanderLinden's analysis found significant funding for AI-based insurance startups, too, but they were just the third biggest category in the first half of the year. First was: "risk data. Satellites, sensors, and driving behavior.... This is happening because proprietary risk data has become the scarcest asset in the value chain. Models are abundant. Compute is abundant. Ground truth is not. The ventures that own a persistent, hard-to-replicate view of physical risk are commanding late-stage checks."
She highlights ICEYE, which raised a $500 million Series F "to expand its radar satellite constellation for natural catastrophe monitoring," and Cambridge Mobile Telematics, which raised $350 million for its insights into driving behavior. She also mentions mea platform ($50M), Fulcrum ($25M) and Axle ($17.5M).
Her observation certainly dovetails with what I'm seeing. I've long argued that the surest insurtech winners would be what we called "arms dealers" during the early internet days. Just as Sun Microsystems made bank by selling servers to startups, whether they thrived or, more likely, crashed and burned, companies that developed important, proprietary data sources were always likely to thrive.
And there have been impressive advances in risk data, as evidenced by any number of articles we've published recently at ITL. This interview I did with Eagleview lays out a vision for how aerial views of properties will enable continual monitoring of property risks. This piece, from Nearmap, describes how the condition of roofs and other aspects of properties can be tracked long before a claim surfaces. This describes advances in "hyperlocal" weather intelligence. This explains how catastrophe modeling is moving beyond static pictures of disasters and toward images that show how floods, wildfires, etc. develop over time. We've also published on new ways to track maintenance records of commercial properties to better understand the likelihood of a claim, to monitor for the next pandemic, and so on.
VanderLinden says the second biggest category of venture investment was in digital-first insurers and MGAs and offers a key insight: "Not one of them is a generalist." She writes:
"Alan raised $116M for digital health in France. Corgi closed a $106M Series B insuring technology companies. Counterpart took $50M for small-business liability, Shepherd $42M for construction, Lassie $75M for pet, Zego $28M for gig drivers. Stoïk and Mitigata both raised for cyber, on two different continents.... The funded insurance provider of 2026 is specific, defensible, and priced for its niche."
Third was AI: "$216M went to AI-led claims, underwriting, and operations automation.... These ventures do not compete with insurers. They sell digital labor to them. Claims handling, prior authorizations, underwriting triage, document verification: the workflows where a human-agent ratio can shift fastest and the savings land on the P&L within quarters, not years."
The insurtechs that went after incumbents head-on -- notably Lemonade, Hippo and Root -- are still around and seem to have stabilized after years of struggle but are way down from their peaks in early 2021. Lemonade shares are off some 65%, Root is down 85%, and Hippo has fallen 90% even as the S&P 500 has nearly doubled. So I continue to believe that the sorts of "arms merchants" VanderLinden describes are the future of insurtech.
Cheers,
Paul
P.S. If you'll permit me a proud papa moment....
My older daughter made her debut in the Wall Street Journal over the weekend. She trekked the 500-mile Camino de Santiago in Spain this spring and wrote an essay [free link] about the trip that has generated some 500 comments and emails and spent some time on the "most popular" list. It's a splendid piece. I'm delighted for her.
I also love that the Carroll family is now on its third generation at what we joke is the family business. My father spent a year at the WSJ. My younger brother and I combined for 59 years. Now Shannon....