How to Cut Through the Noise and Evaluate an InsurTech Startup in 2025

Written By Casey Higgins-Johnson

It’s 2025. Innovation is everywhere, and InsurTech startups are launching faster than ever.

But while the buzzwords may have shifted to AI and digital automation, the industry’s core problems remain the same. Legacy systems and resource constraints impede product innovation and growth. Life insurance underwriting is still time-consuming, cumbersome, and expensive. Instant decision life insurance solutions still have too many referrals to underwriting. Regulatory compliance is still a major barrier to scale. Claims still face delays. 

We saw signs of this back in 2019. What’s different now is the level of urgency coming from different fronts, and AI being just one of the potential disruptive technologies.

In today’s capital-constrained, tech-saturated environment, it’s harder than ever to identify which startups will move the industry forward.

Whether you're a carrier or IMO, evaluating InsurTech startups requires more than a good pitch. Here’s a practical framework to assess what’s real, what’s useful, and what’s likely to last.

8 Questions to Ask When Evaluating an InsurTech Startup

1. Are they solving a real problem?

Start with the basics: does the product address a specific, high-cost pain point in the insurance value chain?

The strongest startups focus on real problems like underwriting delays, compliance risk, or agent attrition, not just cosmetic improvements.

Ask: What friction are they removing for carriers, agents, or consumers? Does this create measurable time or cost savings?

2. Is the timing right?

Even great technology can fail if it arrives too early — or too late.

In 2025, insurers are looking for modern tools that are AI-native, API-first, and built with compliance in mind. Founders should understand how buying decisions are made today and what gaps still exist in the market.

Ask: Why is now the right time for this product? Is it aligned with current industry needs and tech expectations?

3. Who’s on the team?

Execution matters. Teams that combine insurance domain knowledge with technical and product expertise tend to outperform. If the team hasn’t worked with carriers, distributors, or regulators before, they may underestimate how complex the space really is.

Ask: Do they understand how insurance workflows, sales, and compliance operate? Can they speak fluently to the pain points of the people they’re building for?

4. Do the unit economics work?

In this market, strong financial fundamentals are essential. Flashy growth doesn’t matter if margins are weak or churn is high.

Ask: What’s their customer acquisition cost vs. customer lifetime value? Is the model scalable and sustainable?

5. How will they sell?

Distribution is often overlooked, but critical. Long sales cycles, regulatory complexity, and fragmented decision-making make selling into insurance difficult.

Ask: Do they have a clear go-to-market plan for carriers, MGAs, or agencies?

6. Is the tech actually built for insurance?

Insurance requires more than a great UI. The backend matters; integrations, scalability, and security all need to be in place.

Ask: Does the product integrate with core systems like CRMs and third-party data? Are there robust APIs, developer documentation, and security protocols?

7. Can they scale without compliance issues?

Insurance is a regulated industry. Startups need to build with compliance in mind and have a plan for any legal or regulatory hurdles as they grow.

Ask: Do they have a roadmap for SOC 2, HIPAA, or NAIC alignment? 

8. Is there proof?

Early-stage doesn’t mean untested. The best startups can point to real usage and satisfied customers, not just potential.

Ask: Are there live customers and case studies? What’s the renewal rate or engagement level?

🚩 Red flags to watch for

  • Buzzword-heavy AI features without clear business value

  • Horizontal SaaS tools rebranded as “InsurTech”

  • Founders with no experience working with insurance carriers or regulators

  • Lack of technical documentation or integration options

  • No active users, customers, or measurable results

These are common reasons why InsurTech startups fail. Spotting them early saves time, money, and energy.

Final thoughts

Buying from or investing in an insurance software company should be treated like any high-stakes decision: with clear criteria, thoughtful questions, and a focus on long-term value.

It’s not just about innovation. It’s about implementation, compliance, and business results.

What we’re building

At IIP Group, we’ve seen these challenges firsthand, and we’re focused on solving them.

Our solutions include:

  • Best Plan Pro: Patented recommendation engine that makes underwriting easier for life insurance agents 

  • Rapid eApp: Streamlined applications for faster time-to-issue

  • ScreenWrite™: Pre-screener to filter out ineligible applicants

  • RapidSign: Real-time, multi-party e-signature capture

These tools help carriers and agencies:

  • Save time and increase agent sales

  • Lower acquisition costs

  • Improve application placement rates

  • Speed up processing

  • Improve audit readiness

To learn more, visit InsuranceSoftwareAutomation.com or reach out to talk through your next InsurTech investment.

Casey Higgins-Johnson
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