What Is Insurtech?

Definition & Examples of Insurtech

Aftermath of a car crash

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Insurtech—short for "insurance technology"—is a broad category of constantly changing technologies used in the insurance industry. Any technology that's used by an insurance company to increase the efficiency of its operations could be considered insurtech.

Learn about some common examples of insurtech, and how they're used by the industry.

What Is Insurtech?

Insurtech can be any new technology introduced to insurers' operations to save on costs or streamline processes. Insurtech is a subdivision of fintech—new technology introduced to improve the operations and bottom line for finance companies. Like fintech, insurtech refers to a wide range of technology, so it's difficult to pin down any one defining characteristic or application.

Insurtech may also refer to companies that produce insurtech. From 2010 to 2019—roughly considered to be the first nine years of insurtech—some $16.5 billion have flowed to startup companies in the insurtech field.

How Does Insurtech Work?

Since insurtech is new by definition, its applications are constantly evolving. Generally speaking, insurtech streamlines and enhances backend processes, improves the customer experience, and saves the insurance company money.


One concern about insurtech is the issue of privacy. Insurance companies retain sensitive information about their customers, so any new technology that's introduced must have strong security protocols.

Chatbots and smartphone apps are examples of how insurtech streamlines the backend process. Insurance companies no longer need to hire customer service employees to respond to every customer's concern. Many can be answered by chatbots that automatically respond to inquiries day and night. In addition to simplifying the customer service experience, this also saves the company money.

Smartphone apps improve the customer experience, as well. Instead of having to print out photocopies of licenses and other paperwork, a customer can simply snap a picture with their phone and submit it through the app. This saves time and resources for both the customer and the company.

Types of Insurtech

Here are some of the common types of insurtech you could expect to see utilized by an insurance company. Some of these pieces of technology will eventually be phased out by newer technology, while others will evolve and remain an important aspect of insurtech.

Artificial Intelligence

The term artificial intelligence (AI) refers to software that can perform functions normally associated with humans, such as reasoning and learning. Chatbots, which are essentially computer programs that can communicate with customers verbally or through text, are examples of AI insurtech.

Machine Learning

Another type of insurtech is machine learning, which is a subcategory of AI. As its name suggests, machine learning is a technology that enables machines to "learn" over time. It utilizes algorithms to mimic neural networks in the human brain. Machine learning allows computers to acquire knowledge by extracting patterns from raw data rather than following specific instructions.

Insurance companies collect large amounts of data, but companies without insurtech utilize as little as 10% of that data. Machine learning enables insurers to mine their data more effectively and extract valuable information. Here are some ways insurers are using (or will likely use) machine learning.

  • Risk modeling: Analyzing claims data in order to predict the risk of future losses
  • Demand modeling: Using mathematical models to estimate premiums and predict future demand for products
  • Detecting fraud: Identifying fraudulent patterns of behavior with machine learning that aren't obvious to human adjusters
  • Processing claims: Automating claim reporting and processing
  • Underwriting: Using machine learning to help underwriters analyze data collected from applicants, flagging errors, and verifying accuracy

Internet of Things

Another type of insurtech is the Internet of Things (IoT). This term refers to ordinary machines (like refrigerators and televisions) that are connected to the internet. An example of IoT is telematics, the use of electronic devices in vehicles to collect, receive, store, and transmit data over a network. Many businesses that own fleets of vehicles equip them with GPS-enabled devices. These devices can be used to track the vehicles' locations and measure driving speeds, braking patterns, acceleration, and other habits. Commercial auto insurers can use data from the devices to provide discounts, improve safety, and analyze accidents.


Wearable technology, like Fitbits and Apple Watches, is another example of IoT that could be used in insurtech. Insurers could offer an incentive for customers who wear these technologies while driving.

Smartphone Apps

Smartphone apps in insurtech can be designed for customers, businesses, or both. Insurance company apps have streamlined the insurance process for people on both sides of the transaction.


Some insurers use drones, especially property insurers. Drones can inspect a property when it would be hazardous to send humans in to inspect, like rooftops and disaster areas. Casualty insurers might also find a use for drones, such as for inspecting and photographing an auto accident site. This technology can help make your workplace safer, too.

Key Takeaways

  • Insurtech is any technology that's used by insurance companies to streamline their operations, provide a better service, or save money.
  • Common examples of insurtech include chatbots and smartphone apps.
  • Insurtech is big business—more than $16.5 billion in funding flowed to insurtech startups between 2010 and 2019.
  • Insurance companies retain sensitive information about their customers, so privacy and data security are paramount to insurtech.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Insurance Information Institute. "Background on: Insurtech." Accessed Sept. 21, 2020.

  2. The Center for Insurance Policy and Research. "Insurtech." Accessed Sept. 21, 2020.

  3. The Center for Insurance Police and Research. "Intelligent Machines and the Transformation of Insurance," Page 11. Accessed Sept. 21, 2020.

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