The $7 trillion insurance industry has long been seen as a slow-moving giant. But when combined with cutting-edge technologies (AI, IoT, blockchain, etc.), it takes on a whole new dimension. Enter Insurtech, transforming the way policies are created, sold and serviced. As digital transformation remaps customer expectations, Insurtech has emerged as the essential infrastructure for delivering smarter, faster and more personalized solutions.

Overview of Insurtech

Insurtech emerged in the early 2000s in response to the inefficiency of traditional insurance, with early innovations focusing on online platforms that allowed consumers to compare and purchase insurance policies digitally. In the mid-2000s, automation and digital platforms streamlined underwriting and claims processes. 

Then, the 2010s saw the integration of IoT and telematics, enabling usage-based insurance, where policies were based on real-time data from devices such as car sensors or wearables, followed by AI and blockchain technology, automating underwriting, improving fraud detection and claims handling. Today, Insurtech continues to evolve, creating even more personalized, efficient and scalable insurance solutions - hence new revenue opportunities.

The Insurtech market is growing very quickly, driven by technological advances, changing consumer preferences, and a big push for greater efficiency in insurance. In 2024, the global Insurtech market is valued at ca. $22.6 billion, and is expected to hit $336.5 billion by 2032 (CAGR of 35%).

Insurtech’s Impact Zone: Operations Redefined

Insurance companies are leveraging Insurtech platforms to modernize their operations, improve efficiency, and enhance customer experiences. These platforms use technologies like artificial intelligence (AI), machine learning, and IoT to create personalized policies, streamline claims processing, and improve risk assessment. For example, wearable devices and telematics enable usage-based insurance with tailored pricing, while AI-powered tools automate claims handling and fraud detection. Digital interfaces, such as mobile apps and chatbots, also make it easier for customers to manage policies, file claims, or access support anytime.

Insurtech is driving innovation through new models like on-demand or peer-to-peer insurance and embedded coverage integrated into purchases (e.g., auto insurance at checkout). By automating repetitive tasks and improving data analysis, these platforms reduce costs for insurers while delivering faster, more accessible services to customers. Many traditional insurers are partnering with Insurtech startups to modernize legacy systems and stay competitive in a rapidly evolving market.

• Customer Onboarding - Digital platforms streamline onboarding with instant quotes and simplified processes. Automation has reduced onboarding time by up to 50% in leading firms, improving customer satisfaction and retention rates.

• Policy Purchase - Mobile apps and online tools enable quick, hassle-free policy purchases. Research shows that 81% of policyholders prefer self-service options for buying insurance, with digital platforms increasing conversion rates by up to 20%.

• Claims Processing - AI and automation have reduced claims settlement times by up to 70%, with some systems resolving claims in under three minutes.

• Risk Assessment - Advanced analytics powered by AI and machine learning enhance risk profiling, improving pricing accuracy by 25%.

• Underwriting - Automated underwriting reduces processing times from weeks to minutes, cutting costs by up to 50%.

• Fraud Detection - AI algorithms and blockchain have boosted fraud detection, reducing financial losses from fraudulent claims by up to 40%.

The Insurtech Technology Framework 

Needless to say, technology plays a crucial role in the development of Insurtech solutions. Below is an interesting breakdown of the market share and role of each technology in this transformation.

• Cloud Computing - Cloud platforms dominate operational efficiency by providing scalable data storage, improved disaster recovery, and seamless integration of AI and IoT technologies.

• Blockchain - Blockchain adoption is growing for fraud prevention, smart contracts, and peer-to-peer (P2P) insurance models. Its decentralized nature ensures transparency and reduces administrative inefficiencies.

• Internet of Things (IoT) - IoT devices, including telematics, wearables, and smart home sensors, are key to usage-based insurance (UBI) and real-time risk assessment. These technologies enhance underwriting precision and customer engagement.

• Low-Code/No-Code Platforms - These platforms are accelerating digital transformation by enabling rapid application development, reducing costs, and empowering non-technical staff to deploy new services.

• Robotic Process Automation (RPA) - RPA is widely used to streamline repetitive tasks like claims processing and policy administration, cutting costs and improving efficiency.

Strategic Insights for Investors

Investable Subsets in Insurtech

• Digital-Only Insurers - These insurers operate exclusively online or via mobile apps, removing the need for physical offices or agents. They offer streamlined policy management, claims processing, and personalized services for a seamless customer experience.
• Embedded Insurance Platforms - Embedded insurance integrates coverage directly into the purchase process of other products, like travel bookings or e-commerce, simplifying the buying process and boosting adoption by meeting customer needs at the point of sale.
• Usage-Based Insurance (UBI) Providers - UBI platforms use real-time data from IoT devices, such as vehicle telematics or health wearables, to offer policies based on actual usage or behavior, commonly seen in auto insurance with premiums adjusted for driving habits.
• AI-Powered Claims and Underwriting Solutions - Insurtechs using AI automate claims handling and underwriting, speeding up approvals, detecting fraud, and improving risk assessments through large data analysis.
• Cyber Insurance Specialists - As cyber threats rise, insurtechs focused on cyber insurance use advanced analytics to assess risks and offer tailored coverage for businesses at risk of data breaches or cyberattacks.
• Health and Wellness Insurtechs - These platforms integrate wellness programs with personalized health insurance, rewarding healthy behaviors through wearable devices or apps while improving risk profiles for insurers.

Key Private Players 

• Next Insurance - Next Insurance is a leading digital insurer focused on providing tailored insurance solutions for small businesses (features inc. general liability, professional liability, workers' compensation insurance, all accessible through an AI-powered platform). The company has raised over $1.1 billion in funding from investors such as American Express Ventures, Allstate and Allianz X.

• Coalition - Coalition is a leading Insurtech specializing in cyber insurance and proactive risk management tools, combining financial protection with real-time threat monitoring and incident response, serving over 160,000 customers globally. Awarded "MDR Solution of the Year" in 2024, the company has secured $770 million from investors like Allianz X and Valor Equity Partners.

• Wefox - Germany-based digital insurance platform that connects insurers, brokers, and customers to streamline insurance distribution and management. The platform focuses on enhancing customer experience through personalized insurance solutions and efficient claims handling. It has raised $1.3 billion in total funding, with notable co-investors including Mubadala, Target Global, and Eurazeo.

Risk Factors 

• Regulatory Challenges - The insurance industry operates under complex and evolving regulations that vary by region. Insurtech companies must navigate compliance requirements, such as data protection laws and licensing, which can be resource-intensive and may slow innovation.

• Cybersecurity Threats - With heavy reliance on digital platforms and customer data, Insurtech firms are prime targets for cyberattacks. Breaches can lead to financial losses, reputational damage, and regulatory penalties, emphasizing the need for robust security measures.

• Adoption Barriers - While digital solutions offer efficiency, some customers and traditional insurers are resistant to change. Lack of trust in new technologies, unfamiliarity with digital platforms, or preference for conventional methods can hinder widespread adoption.

The Bottom Line 

To us, Insurtech presents a strong narrative for both revenue generation and long-term value creation. Technologies like AI and IoT are improving underwriting and claims processes, increasing efficiency, and driving scalability, which boosts profitability. Growing consumer demand for personalized, usage-based policies is opening up new growth markets, especially in areas like telematics-based auto insurance and embedded insurance. Strategic partnerships between startups and established insurers are fostering innovation while maintaining stability. With its high growth potential, improved operations, and expanding market opportunities, we believe Insurtech is a sector likely to deliver solid returns.

At Acquinox Capital, we focus on discovering and supporting high-growth sectors such as Insurtech. Drawing on in-depth research, strategic expertise and a keen eye for emerging trends, we guide our clients to navigate this fast-moving market and seize opportunities driven by innovation.