Artificial intelligence continues to influence nearly every corner of the insurance industry, and recent InsurTech investment trends suggest that momentum is only increasing. According to Gallagher Re’s Global InsurTech Report for Q1 2026, AI-focused companies dominated funding activity during the first quarter of the year, while conversations around AI liability insurance and cyber risk management gained additional traction.

The report highlights how the insurance sector is beginning to view AI liability as an extension of broader digital and cyber exposures. As businesses rely more heavily on automated systems, machine learning models, and AI-enabled decision-making, insurers and InsurTech innovators are exploring how traditional cyber coverage and emerging AI liability products may work together to address evolving risks.

AI Liability Insurance Gains Attention

AI liability insurance is emerging as a growing area of interest as organizations increasingly delegate operational tasks and decision-making processes to AI-driven technologies. From automated underwriting tools to generative AI platforms and predictive analytics systems, businesses are becoming more dependent on digital infrastructure that can introduce new forms of liability exposure.

Potential concerns tied to AI systems may include:

• Algorithmic errors or inaccurate outputs
• Data privacy and cybersecurity incidents
• Regulatory compliance challenges
• Intellectual property disputes
• Operational disruptions caused by automated systems

As these exposures become more common, insurers are evaluating how existing cyber policies may respond and whether standalone AI liability solutions could fill emerging coverage gaps.

The report suggests that AI liability insurance is not developing in isolation. Instead, it is becoming increasingly connected to cyber insurance, particularly as both lines focus on risks associated with digital dependency and technology infrastructure.

Cyber Insurance Continues To Evolve

Cyber insurance has already undergone significant changes over the past decade as ransomware attacks, data breaches, and digital business interruptions became more frequent and severe. The addition of AI-related exposures introduces another layer of complexity.

Insurers may need to consider questions such as:

• How should AI-generated errors be classified within existing policies?
• When does an AI malfunction become a cyber event?
• How can underwriting models adapt to rapidly changing technology risks?
• What role will risk management and governance play in AI-related coverage decisions?

As AI adoption expands across industries, insurers and brokers may see increased demand for guidance surrounding policy language, exclusions, aggregation risk, and emerging liability scenarios.

InsurTech Investment Remains Strong

Beyond the discussion around AI liability, Gallagher Re’s report also points to continued resilience within the InsurTech investment market.

Global InsurTech funding reached approximately $1.63 billion during Q1 2026, maintaining momentum established in late 2025. According to the report, both Q4 2025 and Q1 2026 represented the strongest funding periods since late 2022, signaling renewed investor confidence in the sector.

One of the most notable findings involved the concentration of investment activity around AI-focused companies:

• Approximately 95% of Q1 funding went to AI-focused organizations
• Companies connected to AI liability and cyber insurance raised more than $440 million during the quarter
• Average deal sizes increased by more than 23% quarter-over-quarter
• Early-stage funding activity also accelerated, including another InsurTech mega-round exceeding $100 million

These trends indicate that investors continue to prioritize technologies designed to improve efficiency, automate workflows, enhance risk analysis, and support digital risk management.

What This Means for the Insurance Industry

The growing overlap between AI liability and cyber insurance reflects broader shifts occurring throughout the insurance marketplace. Technology-related risks are becoming more interconnected, and insurance products may continue evolving to address exposures tied to automation, digital infrastructure, and AI-enabled business operations.

For insurance professionals, this development may create opportunities to:

• Reevaluate cyber insurance offerings and exclusions
• Monitor regulatory developments involving AI governance
• Educate clients about emerging technology-related risks
• Explore new underwriting approaches for AI-driven exposures
• Assess how risk management practices influence insurability

While AI liability insurance remains an emerging segment, investment trends suggest the market expects continued growth and innovation in this area.

As InsurTech investment continues flowing toward AI-focused solutions, the insurance industry will likely continue balancing innovation opportunities with the need to address increasingly complex digital risks.

Meteorologists are closely monitoring the development of a potential “super El Niño” later this year, and some forecasts suggest it could become one of the strongest on record. According to a recent report from The Weather Channel, warming ocean temperatures in the equatorial Pacific are increasing the likelihood of a major El Niño event developing by late 2026.

El Niño is a climate pattern that occurs when sea surface temperatures in the central and eastern Pacific Ocean become warmer than average for an extended period. A “super El Niño” refers to especially intense warming — typically when temperatures rise at least 2 degrees Celsius above normal.

These stronger events are relatively rare. Since 1950, only a handful of super El Niño events have been recorded, including the well-known 1997-98 and 2015-16 events.

Wetter Conditions in Some Areas, Drier Conditions in Others

While every El Niño event behaves differently, stronger systems often produce noticeable shifts in weather patterns across the globe.

The Weather Channel reports that wetter winter conditions are commonly seen across parts of the southern United States, including California, the Southwest, and the Gulf Coast during strong El Niño years. Increased rainfall can raise the risk of flooding, mudslides, and severe storms in some regions.

Meanwhile, northern parts of the U.S. often experience milder and drier winter conditions during El Niño events.

Globally, El Niño can also influence rainfall patterns in regions such as Africa, South America, Australia, and Southeast Asia. Some areas may experience heavier rain and flooding, while others could face drought conditions.

Hurricane Seasons Could Shift

El Niño may also affect tropical storm activity.

According to The Weather Channel, stronger El Niño conditions typically increase wind shear across parts of the Atlantic Ocean, which can make it harder for hurricanes to form and strengthen. As a result, Atlantic hurricane seasons are often quieter during strong El Niño years.

At the same time, hurricane activity in the eastern and central Pacific Ocean often becomes more active.

Rising Global Temperatures Remain a Concern

One of the most closely watched effects of a super El Niño is its impact on global temperatures. The Weather Channel notes that these events often contribute to significant temperature spikes worldwide as additional heat from the Pacific Ocean is released into the atmosphere.

The previous super El Niño in 2015-16 coincided with record global warmth, and experts suggest another strong event could contribute to additional temperature records in the coming years.

As scientists continue monitoring ocean and atmospheric conditions, forecasts may evolve. Still, growing confidence in a potential super El Niño means weather experts around the world will be watching closely in the months ahead.

Global reinsurance dedicated capital reached a record $648 billion at full-year 2025, an 11% increase from 2024, according to Gallagher Re's May 2026 Reinsurance Market Report.

The growth marks the second-strongest year for capital expansion in more than a decade, driven primarily by retained earnings and strong inflows into non-life alternative capital. Capital growth significantly outpaced revenue growth, which came in at just 1.4% for the year.

Traditional reinsurance capital rose 10% to $513 billion, accounting for roughly two-thirds of the overall increase. Retained earnings were the single largest contributor to reinsurance groups, accounting for nearly 50% of their capital increase. Non-life alternative capital grew 18% to $135 billion, its largest annual increase since Gallagher Re began tracking the metric. Inflows supported not only property catastrophe risk but also casualty lines.

The Gallagher Reinsurance Composite, which includes large Bermudian and Big Four European reinsurers, reported a 19.3% return on equity for 2025, up from 16.7% in 2024. Across the broader reinsurance groups universe, ROE reached 18.3%, the best result since the report's launch in 2014. The strong headline numbers were supported by below-normalized natural catastrophe losses, which provided a 1.6 percentage point benefit, as well as higher prior-year reserve releases and realized capital gains.

On the whole, however, the picture was more mixed. The Composite's underlying ROE, which strips out catastrophe normalization, reserve development, and investment gains, declined to 13.5% from 14.5% in 2024. That deterioration reflected a higher underlying combined ratio of 94.7%, up 1.7 percentage points, partly attributable to softer market rates.

The reported combined ratio for the Composite improved to a record low of 82.5%, while reinsurance groups overall posted an 84.3% combined ratio, also the lowest since 2014.

Revenue growth slowed sharply. The Composite reported just 1.2% revenue growth in 2025, down from 9.7% in 2024, as property and specialty lines softened. Casualty rates remained broadly flat. Several larger companies, including Munich Re, Swiss Re, and SCOR, pulled back from or trimmed U.S. casualty portfolios, while smaller Bermuda-based reinsurers actively deployed capital into casualty and specialty lines.

Natural catastrophe losses totaled at least $129 billion globally in 2025, below the 10-year average of $136 billion. The California and Los Angeles wildfires drove 32% of global insured losses, while severe convective storms accounted for approximately 47%. The U.S. accounted for 77% of global catastrophe losses.

Capital return to shareholders also increased. Total payouts, including dividends and buybacks, equaled 51% of net earnings, up from 46% in 2024. Share buybacks doubled as a percentage of total capital returned, reaching 45%.

Looking ahead, Gallagher Re estimates traditional reinsurance capital will grow approximately 4% in 2026. The firm projects the Composite will deliver a 14% to 15% ROE for the full year, assuming normalized catastrophe losses and investment contributions in line with historical averages.