Ultimate Guide to Insurance as a Service in 2025

The insurance sector is experiencing a rapid shift towards digitalization. More than 80% of large insurance companies have either invested in or are working with insurtech companies.¹ The “insurance as a service” approach is a part of such collaboration between insurtechs and established insurance companies.

Explore the insurance as a service approach, challenges, and top 7 insurance as a service companies:

Top 7 insurance as a service providers

The following insurance platforms offer cloud computing solutions to insurers to help them digitalize their:

• Underwriting
• Risk assessment
• Claims processing
• Customer service
• Document management and so on.

Thus, these digital insurance platforms can help insurers manage a fast digital transformation process. While we were picking best insurance as a service providers we have used our lists of:

• Insurance suites.
• Insurance claims management.
• Insurance underwriting.

We only choose online insurance providers with ratings of at least 4. (between 0-5). While we were sorting the insurance platforms, we used user ratings since they provide different services for insurers, e.g., underwriting and claims processing.

Table 1: Top 7 insurance as a service platforms

What is insurance as a service?

The Something as a Service approach is widespread in many industries. The X as a service approach is always associated with the purchase of services from vendors on a subscription basis to increase a company’s operational efficiency. “As a service” solutions are popular because they are relatively cheap, easy to install and ensure scalability and quick upgrades.

So, “insurance as a service” means that startups offer other companies the use of selected pre-built elements of the insurance value chain on a subscription basis, essentially running insurance operations for others. Such platforms are cloud-based and can help improve core insurance practices such as Underwriting, claims processing, fraud detection, and customer service, as Figure 1 illustrates.

Figure 1. Insurance as a service solutions

Why is insurance as a service important now?

Necessity to improve margins

The best price is the most effective criteria for buying business and property insurance. However, as Figure 2 shows, most insurance companies operate with very low or negative economic profit margins. Consequently, insurance companies need to improve their operational processes. The “insurance as a service” approach offers a relatively easy and cost friendly path to digital transformation for insurance companies and helps incumbents to remain competitive.

Figure 2. Economic profit of insurance companies 

McKinsey²

Pressure to adopt new technologies fast

With deregulation and tech innovation, insurtechs are innovating fast which forces the whole industry to innovate at a faster pace. As Figure 3 indicates, insurer executives plan to increase their technology investments. Insurance as a service helps insurance companies adopt new technologies quickly.

Figure 3: Emerging technologies where insurance executives expected to increase spending

Source: Deloitte³

What are the fundamental insurance as a service models?

It is possible to classify insurance as a service into three different categories: Full-stack digitization, digitizing process assistance, and core service digitization.

1. Full-stack digitization

Full-stack digitization is an end-to-end infrastructure for deploying digital insurance practices. In the name of full-stack digitization, insurtechs can develop a platform for an incumbent company or the companies can agree on a licensed white-label backend. Such Insurtechs are examples of B2B2x where they facilitate the digital transformation of old-fashioned insurance companies. Full-stack digitization saves infrastructure costs and helps incumbents conduct technology driven insurance practices from anywhere, anytime.

2. Digitizing process assistance

Some Insurtechs are working with incumbents to redesign internal processes within a closed digital ecosystem for non-insurance practices. For example, providing effective customer service using NLP-driven chatbots is a common digital solution that offers efficiencies to businesses whether they are insurance companies or not. Automating customer service, company accounting systems, IT requirements, etc., by leveraging the “insurance as a service” model, falls into this category.

3. Core service digitization

Some Insurtech companies offer their services in a specific area of insurance, such as underwriting, claims processing, and fraud detection. Using such services can help incumbents compete with innovative insurers that can:

• Conducting an appropriate risk assessment with technology-driven underwriting processes. Therefore, they can set a lower premium, which gives them a larger market share, as price is the main criterion of insurance customers.
• Ensuring customer engagement with fast claim processing.
• Gaining a greater strategic movement area in pricing thanks to effective fraud detection.

Challenges insurance as a service companies face

1. Securing digital operations

As digital insurance becomes standard, cybersecurity has become critical to protect customer data and uphold trust. Insurance companies need robust defenses against cyber threats to avoid costly breaches and data compromise.

2. Rising consumer expectations

Today’s modern consumers demand a seamless integration of technology with their customer experience. Insurers must leverage data-driven insights and adapt to provide customer-centric digital services, including mobile apps and AI-powered support.

3. Attracting and retaining skilled talent

Securing digitally skilled professionals is crucial to support industry innovation. Insurance expertise combined with technology proficiency is essential, and companies must create an environment aligned with a tech-driven business model to retain talent.

4. Navigating regulatory changes

Meeting compliance requirements in a changing regulatory landscape requires agility. Insurance companies must balance regulatory adherence with digital innovation, making compliance a core part of their business cases.

5. Adapting to insurtech and disruptive technologies

Insurtech startups are revolutionizing the industry, challenging traditional insurers to adapt quickly to embedded insurance, IoT, and AI innovations. Embracing these changes provides new business models and revenue streams for insurers.

6. Managing climate and catastrophic risks

With rising climate-related claims, insurers need advanced risk modeling and insurance products that can mitigate the financial impact of catastrophic events, ensuring their core business can withstand future disruptions.

7. Responding to shifting demographics

With an aging population, the insurance industry must develop coverage options like long-term care policies. Adapting insurance policies to address these demographic shifts will help meet evolving customer expectations.

8. Containing healthcare costs

Rising healthcare costs challenge health insurers to provide comprehensive insurance products while keeping premiums manageable. Innovation in health models and pricing strategies is essential to balance coverage and affordability.

9. Embracing digital distribution channels

With a shift towards online channels, independent agents and brokers need to adjust. Insurers are focusing on direct-to-consumer platforms to streamline the insurance value chain and adapt their distribution models for a digital-first audience.

10. Maintaining profitability in low-interest environments

Prolonged low-interest rates impact revenue streams from investments. Insurance companies must seek alternative business cases to maintain profitability while ensuring they can meet claims obligations.

For more, please see challenges of cloud insurance applications.

Further readings

By reading our selection of five articles, you can learn more about the latest developments in the insurance sector.

• Top 3 Technologies That Enhance Business Insurance Pricing: McKinsey shows that business insurance is an attractive area for insurers. According to research, the best price is the top priority of business insurance customers. In this article, we present the most important technologies that help insurers lower premiums to gain a greater market share.
• How is AI Changing the Health Insurance Practices?: Health insurance is an area that generates more than $1 trillion annually. In this article, we discuss how AI/ML models improve health insurance practices by more effectively detecting fraud, lowering premium prices, and increasing customer satisfaction.
• Impact of the Low/No-Code Platforms on the Insurance Sector: As with insurance as a service, low/no-code platforms help insurance companies easily adopt technology. In this article, we present the pros and cons of using low/no-code platforms that eliminate the need for employees with code skills to perform digital transformation.
• Insurtech Guide: What it is, Trends, Technologies & Challenges: This article is our main introduction to the insurtech landscape and the latest trends in the insurance sector.
• 6 Ways IoT will Change the Insurance Sector: Smart devices have the potential to completely change the insurance sector as we know it. They monitor the environment we live in 24/7 and will thus reduce the percentage of physical losses. However, the advent of the IoT could bring more cyber risks, and soon cybersecurity insurance could be the most important insurance practice.

You can also check our list of top insurance suites.

External Links

• 1. The new face of insurance. IBM. Accessed:10/31/2024.
• 2. Pricing strategy for P&C insurers post COVID-19 | McKinsey. McKinsey & Company
• 3. 2025 global insurance outlook | Deloitte Insights. Deloitte