Netflix, Hulu and other streaming services have had a fundamental impact on the cable TV model. Companies such as Spotify have materially changed how the recording industry operates. The likes of Expedia and Travelocity have made traditional travel agencies relics of the past. Insurers, likewise, are not immune to the impact of technology. Traditional insurers face a number of challenges brought on by a myriad of insurance-related technological advancements, broadly referred to as “insurtech.” This includes the emergence of a number of upstart tech-focused competitors looking to improve, and in some cases disrupt, the conventional insurance business model. With these challenges, however, come new opportunities for traditional insurers to increase efficiency, reduce costs and better serve their customers.

To understand insurtech’s potential impact, it is important to understand exactly what it is. Simply put, insurtech is the technology that lies behind the business of insurance. That technology includes “big data,” i.e., the mining, analysis, and utilization of tremendous amounts of previously uncategorized data; “machine learning,” which is the application of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed; the Internet of Things, which is essentially the interconnection of everyday objects through data transmittal (for example the thermostat in your home telling your watch the current temperature); and finally, blockchain, a decentralized digital ledger that cannot be retroactively changed.