Fiberglass is an effective insulator that reduces the impact of outside temperature on indoor comfort in many homes. If used and cared for properly, it can last for a very long time.
Individual fibers in fiberglass insulation are made from sand and recycled glass, so they will not absorb water. Even if they get wet, the fibers themselves will remain structurally sound and functional.
When fiberglass insulation gets wet, the water actually replaces the air in the tiny spaces between fibers. Water conducts heat easily, so this will greatly reduce the insulating ability of the fiberglass until it dries out completely. However, provided that the insulation has not lost any volume in this process, it will work just as well as it originally did once it dries.
If your insulation has become wet with water that is contaminated with foreign materials, such as sewage or dirty rain water, you should remove and replace the insulation. The contaminants could provide a base for the growth of mildew and mold, making your home unsafe or smelly.