Insurtech is the software that insurance companies, insurance agents and insurance buyers use to sell a policy, collect its premium and pay its claims. The word is short for insurance technology. A policy is the contract in which an insurer promises to pay for a defined loss. The premium is the amount you pay the insurer for that promise.
Consider a family in Pune. They insure their car for ₹14,000 a year, and the father buys a term life policy. Term life insurance pays the family a fixed amount if he dies within a set number of years. Then one evening a scooter hits the car, and the family files a claim. A claim is a request to the insurer to pay for a loss, here the repair. Each of these moments runs on software, and different companies build most of it.
The first layer is buying insurance. For a long time in India, insurance was sold by an agent who visited your home and earned a commission on the sale. The page on insurance distribution explains why. Today an agent works inside an insurance agency management system. You can also compare policies yourself on an insurance comparison marketplace. And many employees get health cover through group health insurance that their employer buys.
The second layer is underwriting and claims, the insurer's own systems. At its centre is the insurance core system. The core writes each policy, collects each premium, and records and pays each claim. Before a policy is issued, the insurer must decide whether to accept the risk and what to charge. This decision is called underwriting. It uses data such as property risk data for buildings and driving scores from usage-based insurance for vehicles.
When the family's car is hit, the claim also runs on software. The family photographs the dent in the insurer's app. AI claims estimation reads the photographs and estimates the repair cost. An employee at the insurer checks the estimate before it is approved. When a model drafts a decision and a person approves it, the arrangement is called human in the loop.
Some newer insurers are built entirely this way. A digital insurer sells its policies in an app and settles claims from photographs. Many of the world's insurance core systems are built by engineers in Bengaluru, Mumbai, Pune and Delhi, for insurers in India and abroad. Like banks, many insurers are now replacing an old core system while it keeps running every day.