Walk the exhibition floor at ITC Vegas this year and almost every booth promised artificial intelligence. Some of the executives working that floor expect plenty of those companies to disappear.
Glen Ceniza, chief technology officer of insurance software provider Sapiens, told Insurance Business the insurtech AI market is heading for a shakeout. “You throw a rock in any direction here and you’re going to hit an AI company,” he said. “I think there’s going to be falling out of AI that works and doesn’t work.”
Roger Ferrandis, head of partnerships at underwriting AI company Sixfold, has watched his own corner of the market fill up. Three years ago, he said, two or three companies might have covered a given pain point.
“If you look at underwriting, AI, for example, now there might be 15 or 20 companies, lots of them founded this year or one year ago,” Ferrandis said.
Part of the reason is how easy it has become to start one. “What I do know is that creating a company or a solution is easier than ever if you use AI,” Ferrandis said. Many of the new founders, he added, are former carrier staff who spotted a problem and built a fix with Claude or OpenAI.
Money is flowing to the sector, but unevenly. Global insurtech funding reached $2.44 billion in the second quarter of 2026, its highest quarterly total since 2022, and AI-focused companies took 99.1% of it, according to the Gallagher Re Global InsurTech Report for the second quarter of 2026. Early-stage funding fell 51.8% from the previous quarter, to $264.2 million.
Raising a seed round is “harder now than before,” Ferrandis said, because investors are “looking at more mature startups and they’re placing safer bets.”
He expects more large insurtechs and a steady stream of small start-ups, but “there will be a gap in between. That’s my prediction.”
Ceniza’s test for which companies survive comes down to what their AI reasons from.
“The AI models are only as good as the data substrate that you give it, what it can reason against,” he said.
Sapiens has its own stake in that argument. On October 6, 2026, the company launched Sapiens Brain, a knowledge graph it says is built from more than 40 years of insurance software, code and documentation. When Ceniza presses rival vendors on what sits under their products, he said, the answers rarely satisfy him.
“I don’t know what you’re reasoning off of,” he said. “And then you peel that apart and every single time they’re like, well, we can integrate with you.”
Mergers may follow, Ceniza said, but he expects more companies to fail than to be bought. “I think the companies that have a solid foundation and they’re innovating with AI, it’s not just us, are going to be the ones that stick around.”
Not everyone on the floor was won over by the pitches. Sergio Zuniga, CEO of Blitz, a commission management platform expanding into the US from Latin America, said much of the messaging missed the point.
“Oh no, everything is about AI, for good, for bad,” he said. “It’s like, I mean, if you’re doing underwriting, hey, be specific. We use AI to do underwriting. Perfect.”
Henry Maley, senior vice president of sales at Mobile, Alabama-based independent adjuster Mid-America Catastrophe Services, has attended the conference since its early years. “I think probably 5 years ago with InsurTech, a lot of the innovative people overpromised a product,” he said. Vendors are now delivering more of what they promise, in his view, and he has pointed to how drone inspections moved from novelty to standard practice in claims as one example.
AI also dominated the claims sessions, where executives on one panel warned that AI-generated fake claims are outpacing insurers’ fraud defenses.
Other ITC Vegas panels took on the insurance transformation trends shaping the sector, from parametric cover to drones.
For start-ups, Ferrandis said, the bar has moved. “And it’s no longer a one-sentence pitch, but it’s more a pitch that is attached to credibility and experience.”
