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

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Insurtech, short for insurance technology, is the use of innovative technologies to improve business processes in the insurance industry. From property and casualty to life and health insurance, insurers of all types are implementing these technologies to better meet customer demand and improve efficiency.

What is insurtech?

Insurtech is the use of emerging technologies — such as artificial intelligence (AI), the internet of things (IoT) and blockchain — by insurance companies to improve business processes and increase efficiency. While insurtech startups were the first in the industry to leverage these new technologies, large national insurers are now also adopting insurtech in many aspects of their businesses.

Insurance companies have been increasingly adopting digital-first approaches to customer service in response to evolving consumer preferences, especially among millennials and Gen Zers. New technologies enable the insurance sector to better gather insights from customer data to support its business operations.

Now, insurance companies are seeing opportunities to use insurtech across all stages of the insurance value chain, including marketing, sales and product design, 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) is the use of computers and algorithms to perform tasks that traditionally required human intelligence, including speech recognition, image analysis and complex decision-making. Machine learning, a subset of AI, 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. Applications include:

  • Personalized services: Using customer data to find the most appropriate suite of coverage options or quotes. Allianz, for example, uses AI tools to identify products and services best suited to individual customers.
  • Competitive pricing models: Using data from non-traditional sources to get a holistic understanding of risk.
  • Predictive analytics: Using algorithms to better assess the likelihood of claim filings.
  • Chatbots: Employing natural language processing to 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 smartphones — as well as in business operations, such as smart factories. This type of technology helps insurers collect and analyze data and interact with customers in new ways.

  • Omnichannel communications: Refers to interacting with customers on any device, in any location. Mobile apps are increasingly preferred for business transactions, including in the insurance sector.
  • Telemetry-based insurance policies and claim processing: Allows insurers to analyze data from different devices to price policies, determine appropriate discounts and gather evidence in claim filings. Root car insurance, for example, offers an app that can track a customer's driving behavior, which the company then factors into the customer's premium. With smart homes and health-based wearables, telemetry services can help consumers save money while supporting underwriting and claims-processing 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 transform how insurers assess risk, process claims and underwrite policies.

  • Robotics: Programmable machines that can replicate human movement and behavior, and may change how insurers assess risk — for example, when managing workers compensation claims.
  • Drones: 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 damage after a natural disaster or accident. Large national insurer Chubb has deployed drones to assess damage after hurricanes and wildfires across different parts of the U.S.
  • Autonomous vehicles: Cars that 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 and collision costs rise.


Blockchain is a type of secure record-keeping. To enhance privacy and security, many insurtech companies and firms are seeking to use blockchain technology for:

  • Fraud prevention: To detect malicious or illegal behavior.
  • Smart contracts: To streamline the transfer and storage of information.
  • Tracking sensitive data: To maintain the privacy of financial transactions and medical records.

How will blockchain affect policyholders?

  • Faster claims reimbursements: If blockchain technology enables insurers to automate or efficiently process claims, it's likely that individuals will receive reimbursements more quickly. For example, if policyholders, beneficiaries, hospitals, funeral homes and life insurance companies all existed as nodes on a blockchain, that claims process could occur automatically, as soon as a hospital records that a person has died. Insurance companies could save time tracking unfiled claims, payouts would be remitted automatically and beneficiaries could focus on more pressing issues.
  • Peer-to-peer insurance: The security measures and smart contracts built into some blockchains allow geographically and economically dispersed people to trust each other. Because of this, some industry professionals expect peer-to-peer insurance to become more common.
  • Usage-based insurance: Since blockchain enables companies to capture and track data on a more detailed level than was possible before, it will likely allow insurers to gain deeper insight into policyholders' daily behavior. Because of this, policyholders may see their insurance rates based more heavily on their behavior, such as the distance and speed they drive, the number of steps they take in a day or the number of hours they spend in their house each week.

How insurtech is reshaping insurance

Consider when someone takes out a policy on a used car they've just purchased. Ideally, both the driver and insurer will know the car's entire history— whether it contains original equipment manufacturer (OEM) parts or generic versions; whether it's been involved in a collision or received repairs from flood damage; and even whether previous owners regularly changed the oil.

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

  • Platform-based approaches to customer service: Allow customers to interact with their insurer using websites, mobile apps and other digital platforms, such as for purchasing a policy or 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: Allow customers to purchase insurance through a website or mobile app for short-term events, such as hosting a wedding or renting a car, and price them accordingly.
  • Underwriting support and risk analysis: Use predictive analytics to help insurers more accurately predict the likelihood of claim filings, estimate future losses and determine premiums.
  • Claims processing: Leverage AI-based tools and robotic process automation to streamline claims management and more accurately assess damage following an accident or natural disaster.

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