Researchers Yongsu Lee and Hyosook Yim from Seoul Business School, Republic of Korea; published an article on Administrative Sciences in 2025, regarding the trends in InsurTech development. The article provides an up-to-date review of this issue. Here are some key issues.
InsurTech is the innovative use of advanced technologies that improve the quality of goods and services throughout the insurance industry’s value chain. The insurance industry has been recognized as slow-changing due to high-entry barriers and complex product designs. Over the past decade however, advanced technologies, such as artificial intelligence, big data, and blockchain, have been introduced, changing the insurance industry.
According to Boston Consulting Group the global investment in InsurTech startups was about $400 million in 2012. Still, cumulative investment exceeded 15 billion USD over seven years until 2018 and grew at an annual average of 64% over ten years until 2021. In 2021 alone, approximately 14.4 billion USD was invested, representing an 87% increase over the previous year.
InsurTech Technologies
Technologies such as blockchain, big data, artificial intelligence, the Internet of Things, with cloud computing as the underlying infrastructure, can serve as key drivers of InsurTech development.
Blockchain can create an immutable transaction record that all participants on the network can access by leveraging the characteristics of distributed ledgers. The potential impact of blockchain on InsurTech such as decentralization and tamper proofing can increase the transparency of the relationship between customers and insurance companies and improve the risk management of insurance companies.
However, the study stresses that the diffusion of blockchain-related fields has not been as fast as initially expected when blockchain was introduced.
In addition to blockchain, big data and artificial intelligence can also be key technologies driving innovation in the InsurTech industry.
Big data refers to the storage of data from different sources in large volumes and speed. In the insurance market, big data and data analytics are used in various processes, such as product offerings, risk selection, claims prediction, and fraud detection—for example, to offer customized products and enable automated underwriting.
Artificial intelligence is concerned with developing ways for machines to mimic human intelligence. There is a vast scope for artificial intelligence not only in a better pricing of risks but also in fraud prevention and claims handling. Both cost efficiency and new revenue generation could be realized when artificial intelligence transforms the insurance business model from one focused on loss compensation to one centered on loss prediction and prevention.
The Internet of Things is a network of connected objects and devices equipped with sensors and other technologies that can send and receive data to and from other objects and systems. In the context of insurance, its main applications are connected cars, advanced driver assistance systems (ADASs), health monitoring, and home monitoring.
The study indicates that synergies in the insurance industry can be achieved when artificial intelligence technologies are fused with other technologies such as big data and the Internet of Things. In other words, artificial intelligence can be utilized in InsurTech by fusing or coexisting with other technologies.
InsurTech Market Players
Examining changes in InsurTech market players provides insight into the development of InsurTech. Traditionally, licensed insurance companies and insurance brokers specializing in sales have played a major role in the insurance industry, but the evolution of InsurTech has seen the emergence of technology-enabled startups that are disrupting the market.
Studies on the evolution of InsurTech highlight its role in diversifying insurance service providers, but most focus on InsurTech startups or the adoption of InsurTech by traditional insurance companies. Companies that digitize the insurance industry’s value chain and sell insurance products online are emerging as new market players. Now, the InsurTech industry is driven by a new wave of startup companies, most of which were less than five years old with a relatively small but growing consumer base.
Several studies have pointed out differences in how traditional insurance companies and InsurTech startups respond to the market. The research found that while traditional insurers attract customers with products, InsurTech startups emphasize the process and experience of acquiring products. They have achieved success by offering customized products and enhancing communication and relationships with customers using cutting-edge technology.
Due to the success of InsurTech startups, even traditional insurance companies and insurance brokers, which were initially passive about digitization, have begun to adopt InsurTech. Recently, asset management and payment settlement services, which are linked to financial services beyond traditional insurance, have shown high relevance to InsurTech.
Insurance Solutions
The introduction of advanced technologies such as blockchain, the Internet of Things, big data, and artificial intelligence has led to the emergence of innovative insurance solutions characterized by enhanced customization, operational efficiency, and proactive services. The authors point out that while companies failing to adopt InsurTech solutions risk market elimination, those that adapt well can seize significant opportunities.
Significant changes driven by InsurTech can be observed in three key areas: customer interaction, business processes, and product development.
- Significant changes have occurred in how insurance companies interact with customers as they are driven by digital channels and automation technologies.
- In terms of insurance business processes, big data and artificial intelligence are being used across the value chain to increase efficiency and effectiveness. In the marketing stage, customized products are recommended based on customer big data and artificial intelligence algorithms. In the underwriting stage, existing screening results and medical data are used to predict a customer’s life score and in the claims stage, existing medical billing data is used to predict high-cost patients and analyze text on bills to detect possible fraud in advance. In contrast, less than 25% of the world’s 200 largest insurance companies have achieved digitalization of their processes, and 10% have yet to adequately utilize digital technologies in their business processes. In this situation, the researchers understand that incumbent insurers are likely to strengthen their collaboration with InsurTech startups to transform their value chain, while InsurTech startups will focus on solving problems such as claims management as part of their B2B services rather than competing directly with insurers
- InsurTech is driving innovation in product development, resulting in new types of insurance products and services. One significant development is the rise of on-demand insurance products, which allows customers to customize the scope of coverage, maturity, and additional services online. A prominent example is Cuvva, a British company offering usage-based automobile insurance, where premiums are paid hourly based on driving distance using Internet of Things technology.
Changes in InsurTech Technologies
Technology in InsurTech is not an end in itself, but rather a means of solving business problems. Blockchain was initially in the spotlight as a major innovation in the insurance industry, but interest in blockchain declined due to delays in the development of practical business cases compared to its potential.
In the case of the Internet of Things, the main applications of the Internet of Things in the insurance sector are automotive, health monitoring, and home monitoring. In Korea, it is concentrated on automobile and health monitoring.
Artificial intelligence and big data have become the most notable technologies as they help solve problems practically using structured data, such as customer information and transaction details, and unstructured data, such as voice files. In order to continue to realize the benefits of artificial intelligence in the future, it will be important to utilize technologies such as the Internet of Things as a way to discover and acquire the data needed to increase customer utility while developing new business cases.
Conclusions
An analysis of InsurTech-related technologies in the Korea market shows that blockchain and the Internet of Things initially attracted attention, but artificial intelligence and big data have become more prominent technologies over time.
Although blockchain and the Internet of Things technologies were initially expected to drive significant changes in the insurance industry, interest in these technologies waned due to delays in developing practical business cases or the emergence of alternative methods.
In contrast, artificial intelligence and big data have emerged as the most notable technologies because they help address key challenges, such as product customization, reducing screening time, and detecting insurance fraud by leveraging both structured and unstructured data. Thus, from a technological perspective, the research concludes that the key factor in the development of InsurTech is how well a technology can contribute to solving problems within the insurance value chain and create added value.