In the mid-2010s, it was taken as truth that insurers lagged behind other companies, especially in financial services, in implementing new technology. As tech entrepreneurs looked for industries that could be disrupted, insurance was a juicy target.

With interest rates low and underwriting losses widening, these new entrants and their promises to digitally transform the industry were embraced.

For a time, it seemed that they had achieved success as underwriting profit grew, seemingly in concert with increased investment in the sector by carriers and capital. But the COVID-19 pandemic presented a range of challenges to insurers and insurtech startups alike.

High interest rates, changes in the workforce, continuing catastrophes, and geopolitical upheaval have stifled the appetite for insurtech compared to the pre-pandemic era.

In addition, key differentiating factors in the insurance industry relative to other financial services sectors – especially around state-based regulation and agent distribution – limited the impact of the early insurtech startups.

Now insurers still face rising costs and need tech to help gain efficiency, and the insurtech sector, if it is to survive, will have to adapt to a new reality.

As AI becomes an ascendant technology, managing the transition to agentic technology will require a tight partnership between the technology and business sectors of insurance.