CB Insights is out with its State of Insurtech Q3’25 report. The top takeaway? With the total number of deals down and merger and acquisition activity at record highs, the insurtech industry appears to be reorganizing to maximize the opportunities of scale, digital modernization, and market reach.
Deals Down
According to CB Insights’ research, the number of insurtech deals dropped to its lowest level since the second quarter of 2016. Q3’25 featured 76 insurtech deals, 65% less than the industry’s peak of 219 deals in the first quarter of 2021.
In addition to the number of deals being down, the median insurtech deal size has also decreased on a year-to-date basis from $3.8 million in 2024 to $2.9 million in 2025. The report indicates that a diminished early-stage pipeline is to blame. Year-to-date, 60% of all deals have gone to early-stage startups, the lowest deal-share percentage since 2011.
Lastly, the number of active investors in insurtech in Q3’25 shrank to the fewest since the first quarter of 2017. Especially notable was the quarter-over-quarter decline in investors making multiple investments, from 13 in Q2’25 to 4 in Q3’25.
Mergers and Acquisitions Up
At the same time, M&A activity in insurtech was on a tear, reaching its highest levels in three years. There were 21 insurtech M&A deals in Q3’25—the most since Q3’22 when there were 23 deals. This compares favorably to 16 deals in Q2’25. The report notes that the gains in the third quarter of this year helped reverse a trend of decreasing M&A activity between 2022 and 2024.
Among the biggest deals of the quarter were Arthur J. Gallagher’s $2.9 billion acquisition of AssuredPartners and Advent International’s $2.5 billion acquisition of Sapiens. Other major deals of the quarter include Hong Kong-based Sun Life’s additional investment in Bowtie and Zurich Insurance Group’s acquisition of cyber insurance and risk management insurtech BOXX.
The reasons for the uptick in M&A activity are varied and interesting. Some analysts have suggested that business leaders are becoming increasingly confident in dealing with uncertainty and have embraced a “move through uncertainty” mentality, in the words of WTW analyst Jana Mercereau. Other factors include high stock market valuations, which can facilitate acquisitions; relatively stable interest rates; and the relatively weak M&A period from 2022 to 2024. The drive for digital modernization also plays a role. For its part, CB Insights offers an intriguing idea that the relative lack of attention from investors gave established insurance companies the opportunity to “engage more closely with emerging insurtechs.”
Insurtech in Q4 and Beyond
Heading into the final quarter of the year, there are a number of questions for insurtechs and many of them mirror concerns and issues in fintech more broadly. Which companies are actually putting AI to work in interesting use cases, and which are still in a pilot phase purgatory? How well are investors and establishment insurance companies recognizing where the value lies? How will evolving regulatory requirements incentivize regtechs to develop innovative compliance solutions for insurers? These are some of the questions that come to mind when reading CB Insights latest insurtech report. It will be interesting to see how the events of the fourth quarter and beyond help us answer them.
Read the full report—CB Insights: State of Insurtech Q3’25