Haun Ventures Partner: AI Agent and stablecoins are reshaping the insurance industry

Original Author: Chris Ahn, Partner at Haun Ventures, former GitHub executive

Compiled by: Jiahua, ChainCatcher

The Next Giants of the Insurance Industry

The insurance industry is one of the largest industries in the world. Global premiums account for about 7% of the world's GDP, which is approximately $7.8 trillion annually. This scale even exceeds Germany's GDP, which is the third-largest economy in the world.

The insurance industry is so vast because almost every household and business is a customer of insurance companies. Home mortgages, trucks transporting goods, surgeons entering operating rooms, and factories assembling mobile phones all rely on insurance. Most people only think about insurance when something goes wrong, but it actually serves as an invisible safety net supporting the economy.

The insurance industry is also exceptionally old. Many well-known insurance companies in the United States and Europe were established in the 19th century, such as Prudential plc founded in 1848, MassMutual founded in 1851, and MetLife founded in 1868. Even relatively young insurance companies have decades of history: major U.S. auto insurers State Farm and Allstate were founded in the 1920s and 1930s, respectively, while UnitedHealth was established in the 1970s.

In mature economies, there have been almost no new insurance giants emerging for decades.

The reason is that only widespread socio-economic or technological changes can create sufficiently large opportunities for new entrants. Economies of scale are an inherent property of the insurance industry, and the core value of insurance lies in the ability of insurance companies to fulfill their payment obligations when losses occur.

In reality, larger balance sheets and stronger risk tolerance are often more important than gradual socio-economic changes or technological improvements. This is why the last new insurance giants emerged in China in the late 1980s and early 1990s. At that time, Ping An and China Pacific Insurance gradually grew alongside China's massive economic transformation.

However, I believe we are currently in the midst of three significant technological transformations that are opening opportunity windows for new insurance giants:

• AI Agents are restructuring the operations of insurance companies;

• Digital assets are expanding the coverage of insurance products;

• Scientific breakthroughs are changing the underlying risks that insurance companies need to bear.

AI Agents: The Ideal Employees of the Insurance Industry

The first major technological transformation is AI Agents.

Almost every aspect of an insurance company relies on documents and materials. Insurance applications are essentially a set of materials filled out and declared by customers, while claims applications require documentation to explain the loss situation and provide relevant evidence. Claims reviews need to compare the original policy with the claims application to determine whether compensation should be made and how much should be paid.

From this perspective, insurance companies are essentially machines that make decisions by processing materials.

Until recently, insurance documents were still primarily handled manually.

Taking insurance applications as an example, an application typically first goes through an underwriting team, including underwriting assistants and junior underwriters, who check whether the materials are complete, then it is handed over to pricing personnel to calculate premiums based on the application content, and finally approved by senior underwriters for the entire policy proposal.

This is the manual assembly line that an insurance application experiences within an insurance company.

When the same process is replicated across claims applications, claims reviews, and extends to a complete supply chain composed of brokers, wholesale brokers, third-party claims management organizations, managing general agents, and reinsurance companies, it is easy to understand why an insurance business can take several days or even weeks from submitting materials to receiving processing results.

AI Agents have the potential to change the insurance industry because they can quickly process vast amounts of materials and make judgments based on that.

For insurance companies, incorporating AI Agents into daily operations can not only reduce costs and expense ratios but also fundamentally shorten business processing times. When the insurance materials submitted by brokers can be quoted in a few hours instead of days, the insurance companies that respond first will have a significant advantage in securing that business.

Documents will not disappear. However, insurance companies that can convert materials into decisions in a few hours rather than days will operate more efficiently and provide more competitive insurance products.

Stablecoins Expand Insurance Coverage

The second major technological transformation is digital assets, particularly the application of digital assets in life insurance and annuity products.

Life insurance and annuity products account for about one-third of the total size of the U.S. insurance market, representing 2.7% of the U.S. GDP. Although life insurance and annuity products have a large market size in the U.S., the coverage rates in international markets are much lower.

In Argentina and Turkey, life insurance premiums account for about 0.3% of their respective GDPs, while the global average is close to 2%. There is a significant insurance protection gap between the two countries.

This disparity partly stems from the currency issues commonly found in emerging markets.

Life insurance is a commitment that lasts for decades. If consumers are required to lock their savings in a contract priced in a currency that may significantly depreciate during their lifetime, such products inherently lack attractiveness.

In recent years, stablecoins have gradually become a solution to the currency issues in emerging markets.

The total supply of stablecoins has expanded about 2.5 times compared to three years ago, reaching approximately $300 billion. It is estimated that about two-thirds of stablecoins are held by individuals in emerging markets. Local users view them as a dollar asset that can be used instantly and easily transferred, without needing a U.S. bank account.

Life insurance or annuity products priced in stablecoins have the potential to narrow the insurance protection gap in these emerging economies.

For depositors with volatile local currencies who already hold stablecoins, it becomes easier for them to purchase annuity products as savings tools or to buy life insurance for wealth transfer and estate planning.

As stablecoins continue to gain popularity in emerging markets, the demand for savings-type and life insurance products in these regions may continue to grow.

Stablecoins will not immediately bridge the insurance protection gap, and they also bring new risks. However, they at least address an important structural barrier:

Consumers no longer need to make long-term financial commitments in a local currency that they do not trust to maintain its value over time.

Redefining Risk

The third technological transformation is that scientific breakthroughs are changing key assumptions in actuarial models at a pace that insurance companies find hard to keep up with.

The potential impact of autonomous vehicles on the auto insurance industry is a specific case.

Tesla reports that Tesla vehicles with Full Self-Driving (FSD) enabled experience a major collision on average every 5.7 million miles, while the average American driver experiences a major collision every 699,000 miles. This means that vehicles with FSD enabled have a major collision interval that is approximately 7 times longer. Tesla's insurance business has already offered premium discounts for vehicles primarily driven with FSD in some states. However, most other auto insurance companies have not yet reflected this change in their premium pricing.

The pace of advancements in autonomous driving technology is accelerating, providing opportunities for new entrants in the market. They can design and price insurance products for relevant vehicles based on entirely different risk assessments.

Other scientific breakthroughs are still in earlier stages but may also have far-reaching impacts.

The first GLP-1 class drugs were approved by the U.S. Food and Drug Administration (FDA) in 2005. Munich Re estimates that GLP-1 drugs could lead to an annual mortality improvement of 0.2% to 0.5% over the next 20 years. Moreover, GLP-1 drugs not only significantly aid in weight loss but also bring a range of related health benefits.

For example, for overweight patients with existing health issues, these drugs can reduce major cardiovascular events by 20%. Relevant studies show that GLP-1 drugs may lead to significant improvements in cardiovascular health.

Given that heart disease is the leading cause of death in the U.S., GLP-1 drugs could significantly alter the risks borne by health insurance and life insurance companies.

Beyond these specific cases, the larger context is that scientific progress itself is accelerating. From 2024 to 2025, the number of AI patents published is expected to double. The rapid growth in the number of AI patents also reflects that this technology is still evolving at an accelerating pace.

The key variables on which risk pricing is based are changing rapidly: how people drive, how long they can live, and how diseases develop.

Conclusion

The insurance industry may seem quiet because most insurance companies have a long history and deep roots. However, the insurance industry is essentially a safety net that supports economic operations and is one of the largest markets in the world.

Today, three technological transformations are reshaping the insurance industry from different angles:

• AI is changing the operational costs and processing speeds of insurance companies;

• Digital assets are changing the populations that insurance products can reach;

• Scientific advancements are changing the risks that insurance companies need to bear.

These three foundational technological forces are converging and creating favorable conditions for new insurance giants to emerge for the first time in decades.