Insurtech companies are transforming how insurance products reach consumers, blending AI-driven underwriting with digital-first marketing strategies. For marketers, the insurance vertical offers lessons in data-driven personalization, embedded distribution, and customer acquisition at scale. This FAQ covers what insurtech is, how insurers are spending on digital advertising, and what agencies and marketers should know when approaching insurance clients in 2026.

What is insurtech?

Insurtech refers to technologies that automate and enhance insurance processes to reduce costs and improve efficiency. The term combines "insurance" and "technology" and encompasses everything from digital quoting platforms to AI-driven claims processing.

The category has evolved from simple online interfaces to sophisticated systems that reshape how insurance is designed, sold, and managed. Key technologies include generative AI for underwriting and customer service, telematics for usage-based pricing, and blockchain for claims automation.

Insurtechs operate across multiple models: some are full-stack carriers that control the entire insurance value chain, while others provide B2B infrastructure to incumbent insurers. Consumer-facing insurtechs like Lemonade and Root have reached meaningful scale, though profitability remains challenging.

What are the main types of insurtech?

Insurtech spans several distinct models, each addressing different parts of the insurance value chain:

• Digital brokers and platforms. Online-first interfaces that simplify comparison shopping and purchasing through personalized recommendations. These platforms use data analytics to match customers with coverage options instantly.
• Usage-based and telematics insurance. Auto insurance priced on actual driving behavior rather than demographics. 46% to 70% of new auto policies sold through direct channels are now usage-based, per 2024 Actuarial Review data.
• Embedded insurance. Coverage offered at the point of purchase within non-insurance platforms, such as Ethos life insurance within SoFi's banking app or pet insurance through Chewy.
• B2B infrastructure. Platforms providing underwriting, claims management, and operations technology to incumbent insurers. This segment is attracting more investor interest as funding shifts away from consumer-facing startups.
• Parametric insurance. Coverage that triggers predetermined payouts when specific conditions are met, like hurricane wind speeds, rather than requiring damage assessment.

How much are insurers spending on digital advertising?

US insurance industry digital ad spending will reach $16.98 billion in 2026, a 12.7% increase year over year, according to an August 2025 EMARKETER forecast. Insurance now accounts for 34.5% of total financial services digital ad spending, leading banking, payments, and securities.

Insurance maintains a comfortable lead over other financial services categories in digital ad share and will hold that position through 2027. Ad spending will remain strong in part because the category is insulated from tariffs.

How is AI changing insurance customer experience?

AI adoption in insurance is widespread but shallow. 67% of insurers are testing genAI programs, but only 7% have scaled them, near the bottom of all industries studied in a BCG survey. Another 27% haven't started at all.

AI-powered assistants handle initial claims intake and policy questions, though personalized product recommendations remain in early pilots. Forty-four percent of insurers using genAI in underwriting expect 16% to 20% cost savings over the next two years, per a March 2025 EY-Parthenon survey.

Progress on customer-facing AI trails back-office automation. Most insurers prioritize underwriting and claims, although Allstate uses OpenAI's GPT models to draft claims emails with a softer tone than human reps.

Some major insurers, like Great American and Chubb, are asking U.S. regulators for permission to exclude AI-related liabilities from corporate policies, due to potential inaccuracies in AI chatbot results that could trigger lawsuits.

What challenges do insurtech companies face in 2026?

Funding constraints and profitability pressures are reshaping the insurtech landscape:

• Venture funding has plateaued. Quarterly insurtech funding hit $1.0 billion in Q3 2025, down 17% from Q3 2024, per CB Insights. Funding has stayed in the $1 billion to $1.4 billion range since early 2023, far below the $5.3 billion peak in Q4 2021.
• Profitability remains elusive. Lemonade cut its net loss to $38 million in Q3 2025 but still operates in the red. Root slipped back into a $5.4 million loss after a profitable year.
• Acquisition activity is rising. 21 insurtechs were acquired in Q3 2025, the most since Q3 2022. Munich Re agreed to acquire NEXT Insurance at a $2.6 billion valuation.

Who are the major insurtech companies?

The insurtech landscape includes both consumer-facing carriers and B2B infrastructure providers:

Consumer-facing carriers:

• Lemonade. $5.1 billion market cap with $1.16 billion in-force premiums (Q3 2025). Offers renters, auto, pet, and life insurance with AI-driven quoting and claims.
• Root. $387 million in gross written premiums (Q3 2025). Auto insurance priced via telematics. Full-stack carrier controlling design, underwriting, and claims.
• Hippo. Approximately $800 million market cap. Homeowners insurance using smart home data. Profitable in 2025.

B2B and infrastructure:

• Accelerant. Went public in 2025 at a $3.4 billion valuation. Connects specialty managing general agents (MGAs) with investors.
• NEXT Insurance. Acquired by Munich Re at $2.6 billion valuation. Small business insurance platform.

How should marketers approach insurance advertising in 2026?

Insurance marketing is shifting toward digital discovery and embedded distribution. Agencies and marketers working with insurance clients should consider several trends:

• Social media drives discovery among younger adults. 80% of adults under 45 use social media to research financial or insurance products, per Limra and Life Happens' 2025 Insurance Barometer Study.
• Embedded distribution is expanding. Insurers are partnering with digital platforms to offer coverage at moments of relevance: Ethos through SoFi, Lemonade through Chewy, Nationwide through Walmart. These affinity models meet consumers where they're already engaged.
• Privacy concerns require transparency. 40% of consumers cite security concerns about sharing data, per S&P Global. Insurers using telematics or behavioral data must clearly communicate what they collect and how it's used.
• Digital-first creative wins. Insurtechs like Lemonade use playful visuals and moment-based marketing tied to life events like adoption day or sudden illness. This approach makes insurance feel timely rather than abstract.

We prepared this article with the assistance of generative AI tools and stand behind its accuracy, quality, and originality.

EMARKETER forecast data was current at publication and may have changed. EMARKETER clients have access to up-to-date forecast data. To explore EMARKETER solutions, click here.