Published on: September 11, 2026

External Forces & Industry Knowledge

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Strategic Insight and Integration

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FinTech & InsurTech

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Life Insurance

Marketing and distribution - Life Insurance

Policyholder behavior - Life Insurance

Non-country specific

Life and Annuities Community Newsletter

Digital Insurance Grows and Matures

Author: Kevin Pledge

A QUARTER of a century ago, buying life cover meant a stranger in a company polo shirt arriving at the kitchen table with a bunch of forms and a specimen bottle. The paperwork went to a home office, where a human underwriter read it, requisitioned medical records and, six weeks or so later, produced a verdict. Today a healthy 35-year-old in Canada can complete the same transaction on a phone between train stops. No needle, no forms, no underwriter. An algorithm analyses the online application, and the policy is issued before the train reaches the terminus. Where a standard life application once took over a month to decide, insurers can now boast of decisions in a dozen minutes.

For much of the past decade, the digitization of insurance was sold as a simple proposition: Move the business online and the rest will follow.

The industry duly obliged. Comparison sites proliferated, applications went paperless, underwriting was automated, policies were issued digitally and a generation of direct-to-consumer brands emerged. The change was real, but much of it was cosmetic. A paper form became a web form; a call-center script became a chatbot; a signature became a click. Underwriting was the exception—and it is there that the interesting part of this story begins.

What is emerging now is more consequential. Digital insurance is shifting from digitizing steps in an existing process to redesigning the process itself. It is less about interfaces and more about systems: How insurers, brokers, customers and data providers interact within a single, continuous workflow.

Grand View Research, a research firm, believes the global market for digital insurance was worth $431.8 billion in 2025 and will reach $1.55 trillion by 2033, a compound annual growth rate of 16.4% from 2026.[1] Life and health, by the same account, is both the largest slice by insurance type and the fastest growing.

The numbers suggest significant spending, though they should be treated with caution. Definitions of “digital insurance” vary widely: Cloud migrations, systems integration and managed services are often swept in alongside the software licences, and market sizing varies accordingly depending on which source you choose to believe.

What is not in dispute is the direction of travel. Nor is something that’s rather more awkward for the industry’s revolutionaries: Intermediaries are not disappearing. They are being reinserted into the digital story.

Not all Insurance is Digitizing at the Same Speed

The unevenness of digital progress across insurance is often overlooked.

Property and casualty (P&C) lines were the early beneficiaries. Motor, home and travel insurance are bought frequently, are relatively standardized and are often attached to another transaction. They are also easy to compare. That made them natural candidates for online comparison, telematics, embedded offers and automated claims. Out of the blocks, digitization kept full underwriting at the point of sale while delivering price transparency—and with price transparency came thinner margins. The aggregator handed the customer a ranked list and taught a generation to switch every year, while consumers learned to shop and buy directly online.

Nothing comparable has happened in life, where lapsing a policy carries a real cost and where the product is bought once, not shopped annually.

Underwriting remains part of the formula that goes into a successful life insurance sale. A survey by Munich Re, a reinsurer, found that roughly 11% of life policies are now underwritten with no human review at all; the carriers it surveyed expect that share to reach about 49% by 2030, a more than four-fold increase in five years.[2] So-called fluidless underwriting—no blood, no urine, no paramedical visit—has moved from a niche for small face amounts to a mainstream route for policies worth millions. For insurers this reduces the cost of putting business on the books, which in life insurance is the largest controllable expense there is. A slicker purchase journey and an integrated process for the adviser then offer the chance to sell more of it.

The same technology has therefore produced opposite commercial effects: Commoditization in P&C, expanded reach and lower unit costs in life.

Capital has followed. In the second quarter of 2025, according to Gallagher Re, a reinsurance broker, P&C insurtechs raised $362.2 million, the lowest quarterly figure since early 2018, while life-and-health insurtechs nearly tripled their haul to $728.5 million.[3]

The Middleman Who Would Not Die

This brings us to the most confounding finding in the data. Brokers are the largest distribution channel in the digital-insurance market, and the fastest-growing. This is not what anyone predicted. The settled view of the 2010s held that the internet would do to insurance intermediaries what it had done to travel agents: Strip out the commission, hand the customer a comparison engine and let the carrier sell direct.

It did not happen. The insurance-brokerage business was worth an estimated $335.9 billion in 2025 and is forecast to reach $695 billion by 2033, growing at 9.6% a year[4]—slower than spending on digital insurance, but comfortably faster than the world economy.

Four things explain the intermediary’s survival. The first is that the customer does not pay the broker; the carrier does, out of premium. Direct distribution has not delivered economies that show up as a price difference, so there is no visible signal nudging shoppers to cut the middleman out, and no obvious saving if they do. The second is that in life and health the hard part is not comparing prices but knowing what to buy—a problem that gets worse, not better, as products proliferate and riders multiply. The third is how advisers adapted to new technology: While carriers struggled with social media, advisers embraced it, moving from cold calls at dinner time to offering advice that builds a network. The fourth is simply that automation made brokers cheaper to run and advisers more effective. Technology designed to eliminate the middleman was, in the event, used by him, and it improved his margins.

Brokers should not be complacent. If a large language model can digest 40 policy wordings and explain the differences in plain English, the advisory moat is thinner than the industry likes to think. An AI will never know what it is like to lose a loved one. The evidence is mounting that this matters less to consumers than advisers hope.

In a study published in PLOS Mental Health in February 2025, participants could not reliably tell whether responses to therapy scenarios had been written by ChatGPT or by a licensed psychotherapist—and rated the machine’s answers higher on the common factors that make therapy work.[5] A randomized controlled trial at Dartmouth, published in NEJM AI the following month, found that patients treated for depression, anxiety and eating-disorder risk by a generative-AI chatbot rated their therapeutic alliance with it as comparable to that with a human clinician.[6] Therapy and companionship now tops Harvard Business Review’s ranking of how people actually use generative AI, having roughly doubled its share of reported use in a year.[7] If people discuss their grief with a machine, they will discuss their insurance needs with one.

The threat, when it comes, is nonetheless more likely to arrive as a tool inside an agency than as a start-up outside it. That has been the pattern so far.

The Regulator Arrives

The real constraint on digitization may be neither technical nor a matter of customer acceptance. It may be political. Regulation struggles to keep pace with technology, and where it lags it tilts the playing field rather than levelling it. Innovators find themselves working in a grey zone, reasoning by analogy from guidance written for a different process rather than from rules written for theirs. That is a cost incumbents can absorb and start-ups often cannot—which is one more reason the disruption has ended up inside the industry rather than outside it.

What Happened to the Disrupters?

Consider Haven Life. Launched in 2015 as a direct-to-consumer arm of MassMutual, a mutual founded in 1851, it was the industry’s showcase for what digital life insurance might be. Its InstantTerm engine quoted and bound term policies of up to $1 million with no medical exam, in a median of 40 seconds; Celent, a consultancy, named it a model insurer; applicants who qualified for the instant path were three times likelier to buy than those routed to a paramedical visit. The technology did precisely what it promised. In November 2023 MassMutual announced it was winding the business down,[8][9] citing a lack of customer adoption and the cost of acquiring customers. New applications stopped in January 2024 and the last policy was issued that March. The failure was not underwriting but arithmetic: It is one thing to convert an applicant in 40 seconds, quite another to find him at a price a term-life margin will bear. Haven Life could decide instantly; it could not persuade cheaply. The stack outlived the brand, folded back into the parent, where it now serves the agents and brokers the venture had been built to bypass.

Lemonade, the best-known of the digital-native carriers, has dragged its gross loss ratio down to 60% in the second quarter of 2026, from 88% less than three years earlier, and runs loss-adjustment expenses of around 5% against an industry norm nearer 9%, a genuine and durable advantage. It also lost $43.4 million in the quarter but promises its first adjusted-EBITDA-positive quarter at the end of 2026, 11 years after its founding.[10][11]

The pattern is consistent across lines. The technology worked. The customer experience improved. The cost of underwriting fell, dramatically so in life. But the moat around incumbent insurers was never technological. It was capital, licences, actuarial data accumulated over generations, regulatory patience and, above all, distribution—which turns out to run through brokers who have quietly become rather good at software. Digital insurance is one of the fastest-growing corners of enterprise technology. Digital insurers remain a rounding error in global premium.

This article is provided for informational and educational purposes only. Neither the Society of Actuaries nor the respective authors’ employers make any endorsement, representation or guarantee with regard to any content, and disclaim any liability in connection with the use or misuse of any information provided herein. This article should not be construed as professional or financial advice. Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

Kevin Pledge, FSA, FIA, is founder and CEO with Acceptiv Inc. Kevin can be contacted at kevinpledge@acceptivcom. Kevin is moderating a session at this year’s SOA ImpAct conference in Philadelphia titled “The Digital Shift: Enhancing Insurance Distribution Through Technology.”