U.S. Insurtech Demand Set to Soar to $84.9B by 2035 with Health Insurance Leading

The Next Decade of Insurtech: Why the Industry Is Entering Its Most Transformative Era Yet

Insurtech in the United States is no longer a niche innovation story. It is maturing into a defining force behind how insurers operate, compete, and serve customers. With market demand projected to surge from an estimated USD 9.3 billion in 2025 to USD 84.9 billion by 2035, the insurance sector is stepping into a period of sustained digital modernization at a remarkable 24.8% compound annual growth rate.

This growth is powered by a simple truth: insurers who adopt digital tools are outperforming those who do not. Automation in underwriting, claims, distribution, and administration is creating measurable efficiency gains, improving accuracy, and freeing carriers to focus on customer and agent experience. And as consumers continue to expect seamless digital interactions, the pace of innovation is accelerating rather than slowing.

“Digital transformation is no longer a competitive advantage. It’s the cost of staying in the game.”
— Industry Executive, U.S. Carrier

Where Growth Is Happening Fastest

Among all insurance lines, health insurance continues to lead insurtech adoption with a 35.5% market share. Digital enrollment, telehealth integrations, and predictive analytics are reshaping everything from risk monitoring to virtual claims processing. Life and auto insurance follow closely thanks to sophisticated automated underwriting and the rise of identity verification and telematics-enabled pricing.

Here is a snapshot of current market share distribution:

These segments share a common driver: the pursuit of better accuracy through data, paired with customer expectations for speed and convenience.

Who Is Powering the Momentum

Insurance companies represent the largest share of end-user demand at 39.7%. They are investing heavily in AI, low-code platforms, and automated decision engines that streamline everything from risk assessment to claims. Meanwhile, brokers and agents (25.1%) continue to lean on CRM and digital quoting solutions to keep pace with shifting customer behaviors.

To illustrate how the adoption landscape breaks down, here is the only bullet-point section as requested:

End-User Share Breakdown

• Insurance Companies: 39.7%

• Brokers & Agents: 25.1%

• Third-Party Administrators: 18.2%

• Aggregators: 17.0%

Each group is modernizing core workflows, but carriers are increasingly leading the charge as they prepare for enterprise-level digital transformation.

The Technology Stack Behind Insurtech’s Rise

Artificial intelligence now makes up the largest technology segment at 32%, powering risk modeling, claims automation, and fraud detection. Machine learning and analytics follow with 27%, while cloud computing, IoT, and blockchain each play evolving roles in pricing, monitoring, and secure data exchange.

“AI has become the backbone of modern underwriting. It enables us to process more data, more accurately, and more consistently than any manual process ever could.”
— Chief Data Officer, National P&C Insurer

Digital ID and verification technologies provided by companies such as Onfido, IDEMIA, Entrust, and Transmit Security are also becoming essential in onboarding and fraud prevention. As insurers expand digital-first experiences, secure identity validation is rapidly moving from an optional enhancement to a critical function.

Why Geography Still Matters

Regional growth rates reveal the influence of local ecosystems:

The West continues to dominate due to its proximity to tech-forward talent and startup networks. But the South’s growing fintech presence and the Northeast’s financial hubs are not far behind. Even in traditionally slower-moving regions, modernization efforts are accelerating.

What Is Fueling and Challenging the Market

Several forces are driving insurtech’s rapid expansion, including rising consumer expectations, new competitive entrants, and regulatory support for data sharing. Yet insurers still face meaningful challenges such as state-by-state compliance, integrating legacy systems, cybersecurity risks, and the cost of innovation for smaller carriers.

The industry is also witnessing major trends:

• Embedded insurance gaining traction across consumer platforms

• Increased reliance on AI and predictive analytics in underwriting

• Partnerships between carriers and technology providers

• Growth of telematics, behavioral data, and remote inspection tools

These shifts reflect a broader move toward insurance products and services that are more personalized, responsive, and cost-effective.

The Road Ahead: From Innovation to Full-Scale Modernization

The coming decade will mark a transition from innovation-driven experimentation to full enterprise modernization. Insurers are moving beyond pilots and proofs of concept to holistic technology upgrades that touch every corner of their organizations. Automation, advanced analytics, and digital engagement tools are becoming indispensable components of compliant, efficient, and customer-centric operations.

As the U.S. market advances toward 2035, insurtech’s role will grow more foundational. Its influence will be felt not only in underwriting and claims, but also in fraud prevention, risk scoring, regulatory alignment, and customer lifecycle management.

For insurers, brokers, and partners, the message is clear: digital is not the future. It is the present, and the industry is moving faster than ever toward a fully transformed insurance ecosystem.