Quick answer
Insurtech means new technologies that make buying, using and understanding insurance easier, faster and more personalised, and that automate insurers' traditional work[1]. Examples include app-based policies, telematics car insurance, chatbots and AI in pricing and claims, which also raise risks around data, bias and exclusion[2].
Key points
- Insurtech is technology applied to insurance: apps, connected devices, data analytics and artificial intelligence (AI).
- It touches every step of insurance: designing products, selling them, pricing risk and handling claims.
- Telematics lets insurers price car insurance on how a vehicle is actually used; EIOPA found 17% of 209 surveyed EU insurers offer motor insurance linked to connected devices.
- AI is widely used: EIOPA reported use by 50% of respondents in non-life and 24% in life insurance.
- More precise pricing can help careful customers but may make cover unaffordable for others, so supervisors watch for bias and exclusion.
On this page
- What is insurtech, in plain English?
- Which technologies does insurtech use?
- Where in the insurance chain does technology make a difference?
- How does usage-based car insurance work?
- How is AI used in insurance, and who checks it?
- What are the risks of insurtech for customers?
- How does insurtech connect to the rest of fintech?
- FAQ
- Sources
#What is insurtech, in plain English?
Insurance is a deal: you pay a regular amount, called a premium, and in return an insurer promises to pay for certain losses, called claims, such as a car crash or a stolen phone. The insurer can do this because it pools premiums from many customers, and only some of them claim in any year. Insurtech (insurance technology) is the use of new tech to run that deal differently.
The US National Association of Insurance Commissioners (NAIC), which provides expertise, data and analysis to help insurance commissioners regulate the industry, defines it as "new technologies that make buying, using, and understanding insurance easier, faster, and more personalized" and that "can help automate and streamline traditional insurance company practices"[1]. Insurtech is to insurance what wealthtech is to investing: same old promise, new delivery. It sits alongside the other wealthtech topics in this channel, like robo-advisors.
#Which technologies does insurtech use?
The NAIC points to connected devices and the Internet of Things (usage-based car insurance, smart-home sensors, wearables), digital assistants and chatbots, and mobile apps and photo-based claims tools, alongside advances in artificial intelligence[1]. The International Association of Insurance Supervisors (IAIS), the global standard setter for insurance supervisors, also points to big data, platforms and peer-to-peer models, and smart contracts on blockchains[2].
#Where in the insurance chain does technology make a difference?
A useful way to see insurtech is to follow a policy from idea to payout. The IAIS paper focuses on product design and underwriting, and on marketing, sales and distribution[2]. The table follows those stages and adds claims, the step where most customers meet the technology, with a plain-English summary of what changes at each one.
| Stage | Traditional way | With insurtech |
|---|---|---|
| Product design | Standard annual policies | On-demand or usage-based cover tailored to behaviour |
| Distribution | Agents, brokers, phone sales | Apps, comparison websites and cover offered inside other purchases |
| Underwriting and pricing | Broad risk groups (age, postcode, car type) | More granular pricing using behavioural and device data |
| Claims | Forms, phone calls, in-person assessors | Photo uploads, automated triage and fraud detection |
The first three stages follow the scope of the IAIS 2018 issues paper on digitalisation in insurance; the claims row and all descriptions are our summary.
What a digital claim can look like
Report in the app
You describe what happened and upload photos, for example of a dented car door.
Automated triage
Software checks the policy, sorts simple claims from complex ones and screens for signs of fraud.
Human review where needed
Larger or unusual claims still go to a claims handler or loss adjuster.
Decision and payment
If the claim is accepted, the payout is sent, often by bank transfer.
#How does usage-based car insurance work?
Telematics means collecting data from a vehicle, often through a small box, the car itself or a phone app, about things like distance, speed and braking. The IAIS describes usage-based insurance as a model in which prices are based on vehicle-generated data[2]. In a 2023 survey of 209 insurers from 22 EU countries, the European Insurance and Occupational Pensions Authority (EIOPA) found that "17% of the 209 participating insurance undertakings already offer a motor insurance product linked to IoT"[3]. Respondents said the like-for-like price difference with and without telematics is in most cases between 1 and 10%[3].
Worked example
Worked example: what a 1–10% telematics difference means
Take a hypothetical car insurance premium of €600 a year and apply the 1% to 10% range EIOPA's survey respondents reported. Computed with code; your real price depends on your insurer and your driving.
- Premium without telematics
- €600
- 1% lower (€600 × 1%)
- €6 saved, premium €594
- 10% lower (€600 × 10%)
- €60 saved, premium €540
- Range of possible saving
- €6 to €60 a year
The difference can also go the other way: data showing risky driving can mean a higher price or less favourable terms, depending on the product. Before agreeing, read what data is collected, how long it is kept and how it affects your premium.
#How is AI used in insurance, and who checks it?
EIOPA reported that "AI is used by 50% of the respondents in non-life insurance and by 24% in life insurance"[3]. Typical uses are pricing, fraud detection, claims handling and customer service. Supervisors are paying attention. The NAIC says its Big Data and Artificial Intelligence Working Group is implementing a Model Bulletin on insurers' use of AI, and its work covers reviewing AI systems for accuracy and bias, data quality, cybersecurity and model explainability[1].
#What are the risks of insurtech for customers?
Better data can mean fairer prices for some people and worse outcomes for others. The IAIS warns that more granular risk categorisation "could potentially affect risk pooling principles" and may lead to affordability problems, "possibly even leading to exclusion"[2]. It also notes that AI tools and their data can "reinforce or perpetuate existing biases", and that consumers comparing mainly on price may pick less suitable products[2].
Common beginner mistakes with insurtech products
Comparing only the price
Two policies with the same premium can cover very different things. Check the excess, limits and exclusions.
Ignoring the data deal
Telematics and wearables share data about your behaviour. Read what is collected and how it can change your price.
Assuming the app is the insurer
Many insurtech brands are agents or intermediaries; the risk is carried by a licensed insurer named in the policy documents.
Not keeping your own records
Save the policy wording and claim messages outside the app in case you need to complain later.
#How does insurtech connect to the rest of fintech?
One of the fastest-growing insurtech models is cover sold inside another purchase, which we explain in embedded insurance explained. It mirrors embedded finance in lending and payments. Many new insurance products are first tested with regulators' help in regulatory sandboxes, and data-sharing ideas from open banking are part of the same wider trend.
The bottom line
Insurtech applies apps, connected devices and AI to the old insurance promise, changing how cover is designed, sold, priced and paid out. Some changes, like photo-based claims, are simple convenience; others, like behaviour-based pricing, shift who pays what. Supervisors are watching for bias and exclusion, and as a customer the best protection is reading the cover, not just the price.
Frequently asked questions
Is an insurtech company an insurer?
Not always. Some are licensed insurers, while others are agents, brokers or technology providers working with an insurer that carries the risk. The policy documents name the insurer.
Does telematics insurance always cost less?
No. EIOPA's survey found a price difference of mostly 1% to 10% when telematics is used[3], and data can also show risky driving.
Is AI used to decide my insurance price?
What is the biggest risk of insurtech for consumers?
Supervisors highlight very granular pricing that may make cover unaffordable for some people, data privacy and biased models[2].
Sources
- Insurtech (Insurance Topics) — National Association of Insurance Commissioners, 2026 Primary
- Issues Paper on Increasing Digitalisation in Insurance and its Potential Impact on Consumer Outcomes — International Association of Insurance Supervisors, 2018 Primary
- Report on the digitalisation of the European insurance sector (EIOPA-BoS-24/139) — European Insurance and Occupational Pensions Authority, 2024 Primary
