Insurtech: What is it? And how is it changing insurance?

Insurtech: What is it? And how is it changing insurance?

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Insurtech is the use of emerging technologies, such as artificial intelligence (AI), the internet of things (IoT) and blockchain, to improve business processes in the insurance industry. From property and casualty to life and health insurance, insurers of all types are using these technologies to better meet customer demand and improve efficiency.

What is insurtech?

Insurtech, meaning insurance technology, is the use of emerging technologies, such as artificial intelligence and blockchain, in all types of insurance, from auto and home to life and health. While many insurtech startups were among the first to leverage these new technologies in support of business processes, large national insurers are increasingly adopting insurtech in all aspects of their business.

Evolving consumer behavior and preferences, led by millennials and Gen Zers, have encouraged insurance companies to adopt digital-first approaches to customer service. Furthermore, the rise of emerging technologies, such as the internet of things (IoT), has enabled the insurance sector to better gather insights from data to support its business operations.

Accordingly, insurance companies see opportunities to use insurtech across all stages of the insurance value chain, from marketing, sales and product design to underwriting and claims processing.

Types of insurtech: Emerging technologies in the insurance industry

Insurtech businesses leverage artificial intelligence, IoT, blockchain and other emerging technologies to develop innovative business models in the insurance industry.

Artificial intelligence and machine learning

Artificial intelligence (AI) describes the use of computers and algorithms to perform tasks that traditionally required human intelligence, including but not limited to speech recognition, image analysis and complex decision-making. Machine learning is a subset of AI that enables computers to learn from experience and improve predictive accuracy over time.

Today, insurtech companies and startups use AI and machine learning most frequently to improve customer service and generate operational efficiencies. Example applications include:

  • Personalized services, such as finding the right suite of coverage options or quotes most appropriate for your needs. Allianz, for example, has introduced AI algorithms into its platforms to better identify products and services best suited to individual customers.
  • Competitive pricing models, based on a more holistic understanding of risk via nontraditional data sources.
  • Predictive analytics to better assess the likelihood of claim filings.
  • Chatbots that employ natural language processing to better manage customer inquiries and requests via phone, text and other messaging apps. Large national insurers such as Humana have already started deploying AI-based chatbots.

The internet of things (IoT)

IoT is the use of internet connectivity in everyday consumer goods, such as refrigerators, cars and cellphones, as well as in business operations, such as in smart factories. This type of technology helps insurers interact with customers in new ways and collect and analyze data.

  • Omnichannel communications allow insurers to interact with customers on any type of device in any location. Smartphones were the first device to gain widespread popularity, and mobile apps are increasingly the preferred medium to conduct business transactions, including in the insurance sector.
  • Telemetry-based insurance policies and claim processing allow insurers to analyze data from different devices to support insurance decisions. Insurers use this technology to price policies, determine appropriate discounts and gather evidence in claim filings. Customers of Root Car Insurance, for example, can download an app that assesses driving behavior. Root is then able to determine a customer's premium by analyzing the data. With the rise of smart homes and health-based wearables, telemetry services may also help consumers save money while also supporting underwriting and claim-processing decisions across homeowners, life and health insurance.

Robotics, drones and other connected technologies

Artificial intelligence and IoT are also facilitating the adoption of connected technology, such as robotics, drones and autonomous vehicles. These could substantially impact how insurers assess risk, process claims and underwrite policies.

  • Robotics, which are programmable machines that can replicate human movement and behavior, may change how insurers assess risk when underwriting policies. For example, this type of technology could help insurers manage workers compensation claims.
  • Drones are pilotless robotic devices that can operate in areas that are inaccessible or dangerous to humans. Property and casualty insurers, in particular, have started to use drones to inspect property damage after a natural disaster or major accident. Large national insurer Chubb has already deployed drones to assess damage after hurricanes and wildfires across different parts of the U.S.
  • Autonomous vehicles will operate on roads without human drivers. As a result of insurtech, car insurance costs could be built into the price of a car, and premiums may rise as more sophisticated technology is added to cars and collision costs rise.


Blockchain is a type of secure record-keeping. Given its role in ensuring privacy and security, many insurtech companies and firms seek to use blockchain technology for:

  • Fraud prevention to detect malicious or illegal behavior.
  • Smart contracts that streamline the transfer and storage of information.
  • Tracking sensitive data such as financial transactions and medical records.

How insurtech is reshaping insurance

Insurtech solutions use emerging technologies to help insurers improve any stage of their value chain. These technologies help address customer demand, create efficiencies and reduce costs in the insurance industry. Key applications of insurtech research and adoption include:

  • Platform-based approaches to customer service allow customers to use websites, mobile apps and other digital platforms to interact with their insurer, from purchasing a policy to filing and settling a claim.
  • Personalization and customized services allow insurers to identify unique coverage needs and tailor customer service to each policyholder.
  • On-demand services through a website or mobile app allow customers to purchase insurance for short-term events, such as hosting a wedding or renting a car, and price them accordingly.
  • Underwriting support and risk analysis: From predictive analytics to IoT, new technologies can help insurers more accurately predict the likelihood of claim filings, estimate the size of future losses and determine premiums.
  • Claims processing: Insurance companies can leverage tools like artificial intelligence and robotic process automation to streamline claims management and more accurately assess damage following an accident or natural disaster.

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