Insurance x AI | The First Wave of Gen AI in P&C
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The $800 Billion U.S. property & casualty (P&C) insurance industry is one of the economy’s most essential sectors. Yet, despite its importance, the technology supporting the sector remains vastly outdated.
With decades-old infrastructure, and some systems dating back 50+ years, the industry’s technology stack is fragmented, manual, and full of structured and unstructured data. Large Language Models are particularly adept at parsing and working with these forms of data, and with recent breakthroughs in model accuracy and reliability, we believe AI is now ready to support (and even own) high-stakes workflows across insurance.
Unlike past waves of innovation in Insurtech, which largely focused on digitizing legacy processes, today’s AI-native startups are rethinking insurance from the ground up across the value chain – from pricing and risk to claims and customer service.
As a firm, Equal has been investing in Insurtech since our inception. We believe we’re in the early innings of a step function change in how the industry operates, and we’re excited to partner with the founders and companies driving this change.
Mapping the Market: The First Wave of AI-Driven Companies
To understand where innovation is happening, we’ve mapped the current landscape of startups founded post-2021 – a new generation of companies built AI-first, not retrofitted. While incumbents are beginning to adopt AI as well, this map focuses on companies designed from day one for this new world.
As we survey the market, we’re starting to see innovation across every segment of the insurance value chain. Looking at this emerging class of players, we’ve found it helpful to bifurcate the market into two broad categories: AI Enablers and AI-Native Operators.
AI Enablers
AI Enablers are creating vertical-specific solutions that they sell to existing companies in the industry with the intention of streamlining operations or high-friction tasks. We’re seeing these AI innovators across every facet of insurance, from companies supporting underwriting (Sixfold, ResiQuant), claims (Kyber, Qumis), brokerage workflows (Powerbroker, Outmarket), and financing/commissions workflows (Fintary, Ascend). These startups often wedge in through specific pain points, proving a strong ROI through automation, efficiency, and/or accuracy gains.
We’re seeing these AI enablers arise in various different form factors. Some act as copilots: offering tooling to support existing workers with AI-powered workbenches or workflow software to augment their work. Examples of this include Powerbroker in brokerage operations or Sixfold in Underwriting. Others go further: they take on and complete specific workflows, either fully autonomously or with a human-in-the-loop to verify and ensure accuracy. A company like 9root* exemplifies this approach, offering comprehensive automation for complex, multi-step processes.
In the near term, we believe the most impactful AI solutions in insurance will be those workflow owners who can automate and complete work on behalf of companies. By integrating with legacy systems and delivering clear outcomes, such tools can drive faster adoption and demonstrate clear, measurable, and immediate ROI. We see tens of billions of spend across brokerage, underwriting, and claims addressable as AI adoption ramps over the coming years.
AI-Native Operators
On the other side of the spectrum are AI-native challengers – modern takes on traditional insurance businesses leveraging AI to deliver better, faster, and/or cheaper service compared to legacy providers. These companies may occasionally look like flashy “AI” companies, but more often they may look very much like incumbents to their customers while subtly hiding entirely different cost structures or capabilities under the hood. Whereas Enablers provide the infrastructure for industry incumbents to transform, these AI-Native Operators leverage this tooling themselves to challenge industry operators on a foundational level.
These companies may grow by competing with legacy players in their industries, but one of the mechanism that may help them to grow faster in a shorter timeframe is by taking growth buyout or consolidation strategies and then transforming acquired companies with technology.
We’re seeing AI-Native Operators utilize AI to reinvent parts of the insurance value chain, including the following examples:
Distribution - Innovators like Equal Parts*, an AI-native platform for insurance brokerage and SMB agency growth, are redefining the UX and margin profile of insurance agencies. Their brokerage platform handles and automates work for human agents, augmenting their ability to serve and service customers, and allowing them to focus on building trusted customer relationships, and enabling substantial platform synergies.
Claims - Significant VC dollars are finally flowing toward claims processes and automation. Notably, within this segment, we’ve seen a handful of services companies emerge, including both AI-Enabled BPOs and TPAs for outsourced workflows. Example companies here include Elysian and Reserv. These companies compete directly with incumbent third-party admins – a space that traditionally operates on slim gross margins and economies of scale, but could see a step-change in efficiency in workflows across triage, adjusting, documentation, and cycle times on account of AI.
Carriers - A new generation of carriers are leveraging AI technologies to transform carrier operations from the ground up. These companies are utilizing AI to improve both loss and expense ratios, leveraging new methods of analysis for underwriting and managing risk with the intent of enabling substantially better cost structures. We believe this strategy can be especially valuable in categories or lines of business where traditional carriers are struggling to manage new or evolving risks. Companies like Stand,* for example, are utilizing AI to fundamentally rethink the way climate-impacted properties are modeled, protected, and covered.
Looking Ahead
We’re still in the early innings of the latest wave of Insurtech innovation. We believe this moment will give rise to a new generation of transformational businesses built on recent technological breakthroughs and emerging business models, enabling the industry to reach new levels of efficiency, precision, agility, and ultimately profitability.
If you’re building in the Insurtech space – or want to partner, advise, or pilot with innovative startups in the space – we’d love to hear from you. You can reach our team via email at adam@equal.vc and ali@equal.vc.
*Denotes Equal Ventures portfolio companies.