Insurtech Changing How Insurance Works? Here’s What You Need to Know

Just a heads up, if you buy something through our links, we may get a small share of the sale. It’s one of the ways we keep the lights on here. Click here for more.

Insurtech has become a fast-growing trend in the insurance industry, combining traditional business insurance offerings with valuable tech advances like AI and data analytics to provide more personalized and efficient coverage.

By incorporating modern tech, insurance providers can offer better service to their clients, while businesses like tech firms can ensure they get the right type of coverage.

While the core offerings made available by insurance providers remain the same, adopting a variety of insurtech features enables better service that can prove transformative for customers and policy underwriters alike.

The rise of insurtech

As AI and other tech proliferates across many industries, insurance is also beginning to get swept up in a wave of tech-related enthusiasm.

In Q3 2025 alone, insurtech firms received $1.01 billion in funding, with nearly 75% of that funding going to AI-centered companies. Up to this point, insurance has relied largely on manual workflows, even as customers largely come to expect (and prefer) digital, tech-fueled experiences.

With both new insurtech startups and established players who are seeking to better incorporate insurtech in their offerings, insurtech comes in a variety of forms, including AI and machine learning, data analytics, workflow automation, digital distribution, cloud-based and mobile-first systems and other tech integrations. 

In some fields, such as auto insurance, insurers are also increasingly making use of internet of things (IoT) devices, such as telematics that track driving behaviors to gauge risk profiles of individual drivers.

While exact use cases differ between insurance providers, all insurtech applications largely share the same goals of reducing internal costs (especially related to fraud), speeding up the claims and underwriting process, increasing personalization options and ensuring data accuracy.

For example, big data analytics can be used in insurtech to offer more precise risk assessments for accurate pricing and customized product offerings based on a business’s profile. 

As a blog post from Insuranceopedia explains, “Today, insurtech utilizes individual data points – from lifestyle choices to specific risk factors – to tailor policies that fit each person’s unique situation, often leading to more favorable pricing and coverage.

AI algorithms can sift through vast amounts of data to identify patterns and predict outcomes, aiding in more accurate risk modeling and premium determination.

Machine learning, a subset of AI, allows systems to learn from data, improve over time, and make increasingly precise predictions about policyholder behavior and risk.”

By letting insurtech take a larger role in these and other tasks, human insurers are able to take on more of an advisory role, in which they can use their experience and industry expertise to advise clients and offer additional guidance as needed.

With more of the process being automated, insurers can also scale their ability to support a larger number of customers without needing to expand headcount or worry about declining service quality.

How insurtech empowers insurance customers

For customers, insurtech can go a long way in making every aspect of obtaining and using business insurance easier, more efficient, and better personalized.

While a 2025 survey found that only 15% of insurance customers want a fully digital-only self-service experience, an additional 48% “prefer a digital-first model with the option to speak to someone if needed, underscoring the importance of hybrid engagement strategies combining efficiency and flexibility.”

As a blog post from biBerk explains, “The best small business insurance companies also make it easy to interact with them online. Getting quotes, downloading Certificates of Insurance (COIs), and other touchpoints should be fast and frictionless.

You’ve got a business to run and probably little time or patience for confusing or inefficient processes! So, that aspect of the relationship should be a part of your business insurance comparison.”

When done right, insurtech delivers on these important needs — giving businesses the efficiency of technology, but with the option to get additional human support and insight as needed.

The result is faster service, clearer pricing and more personalized products. Because the insurer’s internal teams have had more of their repetitive work automated, they can onboard customers and issue policies faster, while also having more time for direct client interactions and support. 

Of course, insurtech capabilities shouldn’t overshadow the importance of the financial stability and ratings of an insurance provider.

Insurtech can and should enable efficient claims to minimize business disruptions and ensure quality customer service, while also fulfilling all necessary data privacy and security needs (including compliance with applicable regulations).

While the growing adoption of insurtech doesn’t necessarily represent a total transformation of insurance for tech firms, it does enable a better experience than what businesses were previously able to receive.

From improved self-service to more customizable offerings, insurtech is helping create an environment where each business gets the exact level of coverage and support it needs.

A smarter way to handle business insurance

As AI and other technology continue to disrupt and change how businesses operate, the need for business insurance remains of the utmost importance.

This is especially true of the tech firms behind many of these innovations, which face a unique set of liability concerns. Fortunately, with insurtech offerings, many insurers are managing to keep pace with the changing marketplace.

By working with insurers that utilize AI, analytics and other tech solutions, businesses can enjoy faster and more efficient processes for getting quotes, submitting claims or even assessing which policy add-ons are the right fit for their operations.

At the same time, the improved risk insights and reduced costs enjoyed by insurers enable them to increase margins and better serve their existing customers.

Kevin is KnowTechie’s founder and executive editor. With over 15 years of blogging experience in the tech industry, Kevin has transformed what was once a passion project into a full-blown tech news publication. Shoot him an email at kevin@knowtechie.com.