What is insurtech?

Insurtech, a portmanteau of “insurance” and “technology,” refers to technologies that automate and enhance insurance processes to cut costs and improve efficiency. Insurtech has evolved from simple digital interfaces to sophisticated AI systems that reshape how insurance is designed, sold, and managed.

The insurance industry is rapidly changing as companies integrate technologies like generative AI, blockchain, and the Internet of Things (IoT) to make insurance more accessible, efficient, and personalized.

What are some types of insurtech?

Digital brokers and platforms

Digital-first insurance brokers and platforms offer insurance products online, simplifying comparison and purchasing through user-friendly interfaces and personalized recommendations. These platforms use data analytics to match customers with appropriate coverage options instantly.

P2P insurance

Peer-to-peer insurtech models pool premiums from groups of individuals to insure against shared risks. In some models, unclaimed money returns to members or charity, fostering community-based insurance. Lemonade was an early developer of this model.

On-demand insurance

This model allows customers to purchase coverage instantly for specific durations. Popular in travel, gadget, and event insurance, on-demand coverage meets consumer demand for more control and customization.

Telematics and usage-based insurance

Telematics and usage-based insurance adjust auto premiums based on actual usage or behavior. Dynamic pricing models are based on real-time data from connected devices tracking driving behavior, distance traveled, and other metrics.

Parametric insurance

Unlike traditional insurance that pays after damage assessment, parametric insurance triggers predetermined payouts when specific parameters are met, like hurricane wind speeds or earthquake magnitudes. Parametric insurance could help close the global protection gap, .

Microinsurance

Microinsurance targets low-income customers needing small-scale coverage, offering affordable policies with low premiums and coverage limits. It’s used in developing regions for health, life, or property insurance.

Blockchain-based insurance

These models leverage blockchain for transparency, fraud prevention, and efficient claims processing. Smart contracts automate payouts when conditions are met, eliminating traditional claims processes and reducing administrative costs.

Cyber insurance tech

With rising cyber threats, specialized insurtech companies offer coverage for data breaches, cyber attacks, and digital risks.

Health and wellness tech

Health-focused insurtech companies integrate with wellness apps and devices, offering incentives for healthy behaviors and personalized health plans.

How does insurtech differ from traditional insurance?

Insurtech and traditional insurance represent two approaches to offering insurance services, each with unique features, strengths, and challenges. Here’s a comparative overview:

Insurtech

  • Technology-driven operations: AI, big data, and blockchain improve everything from underwriting to claims processing and customer service.
  • Enhanced customer experience: Digital platforms, mobile apps, and automation offer quick, easy access to insurance services.
  • Innovation and flexibility: On-demand insurance, P2P models, and data-driven personalized policies adapt to modern consumer needs.
  • Speed and efficiency: Automation enables faster policy issuance and claims settlements than traditional methods.
  • Data-driven precision: Extensive data analysis creates tailored, competitive offerings through better risk assessment and pricing.

Traditional insurance

  • Established relationships: Long-standing customer connections and deep market understanding.
  • Regulatory expertise: Extensive experience navigating complex insurance regulations.
  • Comprehensive coverage: Wide range of products backed by years of actuarial data and experience.
  • Human touch: Personalized service from agents and brokers for complex insurance matters.
  • Proven risk management: Established practices and reinsurance arrangements protect against large-scale losses.

What are some insurtech trends for 2025?

Agentic AI rises

AI adoption will climb in 2025, with agentic AI platforms becoming essential. These systems will handle complex tasks independently alongside human workers, redefining workflows and client interactions.

Unlike previous AI implementations, agentic systems will work proactively on their own initiative rather than just responding to prompts. This evolution toward autonomous operation will dramatically increase productivity and reshape how insurers approach core functions.

Parametric insurance grows

Parametric insurance addresses the widening protection gap. Instead of compensating for assessed losses, parametric coverage pays based on predefined triggers like specific weather conditions, offering transparency and rapid settlements without lengthy claims processes.

Companies like Ric, a parametric insurance firm launched in 2023, are developing coverage for rainfall and flood events. As climate-related disasters increase, event-triggered coverage will accelerate, addressing risks that traditional insurance struggles to cover affordably.

How is AI changing insurtech?

  • Agentic AI systems: As we said above, these systems will move beyond research into practical application, handling complex tasks independently across the insurance value chain.
  • Chatbots and virtual assistants: AI-powered chatbots improve claims processing efficiency and enable rapid data collection, delivering faster service to customers.
  • Predictive analytics: AI helps insurers forecast claim increases due to weather trends and other factors, enabling proactive risk management.
  • Fraud detection: Enhanced AI models will improve fraud detection by analyzing patterns that human investigators might miss, saving billions in fraudulent claims.
  • Specialized tools: Solutions like Betterview’s Roof Age AI deliver more accurate property assessments. With typical roof age appraisals off by 5-15 years, Betterview estimates it could recapture approximately $1 billion in lost premiums annually.

Who are some top insurtech companies to watch in 2025?

The insurtech landscape is dynamic, with new players emerging regularly, driven by continuous innovation and changing consumer needs.

  • Lemonade: Pioneer in using AI and behavioral economics for homeowners, renters, and pet insurance with a digital-first approach.
  • Oscar Health: Transforming health insurance through technology with user-friendly interfaces and customer-focused services.
  • Root Insurance: Data-driven auto insurance using smartphone technology and telematics to base rates on actual driving behavior.
  • Hippo Insurance: Modernizing home insurance with smart home technology for proactive protection and efficient claims.
  • Ethos Life: Focuses on life insurance, offering a streamlined online application process without medical exams and using data analytics for rapid underwriting.
  • Metromile: This pay-per-mile car insurance charges based on actual distance driven.
  • Next Insurance: Targeting small businesses with tailored, simplified insurance products.
  • Cuvva: UK-based specialist in on-demand, short-term car insurance via mobile app.
  • Clover Health: Tech-forward health insurer using data analysis and preventive strategies for Medicare Advantage plans.
  • Ric: Emerging parametric insurance provider focused on rainfall and flood coverage through event-triggered policies.

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