Insurtech Is the New Defense Tech

There is a class of industry in America that exists to protect and maintain critical infrastructure—systems so essential that their failure would cascade through the economy and destabilize the world. These Critical Infrastructure Providers include companies like Lockheed Martin protecting the airspace, Palantir mapping threats before they materialize, and insurance companies controlling the mechanism without which no home is purchased, no car is financed, no business is opened, and no livelihood is built. All of them should operate under the same dual mandate: a moral obligation to protect the people who depend on them, and a fiduciary obligation to deploy the best available technology and talent to do it.

The defense contractors take this pretty seriously. They spend billions on R&D, hire the best engineers and analysts on earth, and deploy technology so advanced that most of it is classified. The insurance industry, which administers what is arguably the most important product in the world, staffs its frontline with people who completed a few hours of training, while arming them with software that was architected when "the cloud" was a weather term—and then everyone acts confused when the product doesn't work.

Over the last fifteen years, the insurance industry has collectively spent $3 trillion maintaining and layering onto legacy technology, VCs have poured $60+ billion into insurtechs, the market's annual revenues now exceed $9 trillion globally, and industry-wide net income in 2023 was sixty percent of what it was in 2013.[1]U.S. Department of the Treasury (Federal Insurance Office)Annual Report on the Insurance Industryhttps://home.treasury.gov/policy-issues/financi… Combined ratios have exceeded 100% in seven of the last fifteen years for P&C carriers, and in fourteen of fifteen for life and health.

The standard explanation is inflation, macroeconomic volatility, litigation, and so on. Those are real. But the deeper problem is simpler: the industry has failed to adopt modern technology in the places where it would actually matter, its workforce is leaving faster than it can be replaced, and the industry's plan for dealing with this is to keep hiring more people. The churn inflates the cost of every policy, every claim, and every renewal, which inflates the cost of every mortgage, every vehicle, and every product you touch. The fix is not more hiring. The fix is AI in the exact functions where humans are structurally not staying. This is, given what insurance actually does and what happens when it stops doing it, a public safety argument.

The Burrito Problem

A lot of people are worried about the state of the country right now, and a popular data point in those conversations is that the world's most important financial hub is currently run by a communist. People usually respond with some version of "How did this happen?" followed by anxiety about the American empire being vulnerable to outside threats. My reaction tends to confuse people because I tell them the empire has been making itself vulnerable for years, from the inside, through the compounding dysfunction of systems like insurance. And then I explain it using Chipotle.

A chicken burrito at Chipotle in New York cost about $7.25 in 2019.[2]Chipotle Mexican Grill; NerdWalletMenu pricing reference; NerdWallet consumer food price analysis Today it's nearly $12, and once you add tax, guac, and a drink you're at $20. Get it delivered and you're past $25. The instinct is to say "inflation" or "corporate greed" and move on with your day. But the mechanics are more specific than that, and insurance is threaded through every single one of them.

Every ingredient in that burrito rode a Class 8 semi-truck at some point.[3]American Trucking Associations; USDA Economic Research ServiceIndustry economics and freight datahttps://www.trucking.org/economics-and-industry… Insurance for those trucks is up fifty percent since 2019,[4]American Transportation Research Institute (ATRI)Operational Costs of Trucking: 2025 Updatehttps://truckingresearch.org/2025/07/an-analysi… even though crash frequency is down. The increases come from nuclear verdicts (up 116% year over year)[5]Marathon StrategiesCorporate Verdicts Go Thermonuclear: 2025 Editionhttps://marathonstrategies.com/corporate-verdic…, wage inflation up thirty percent, vehicle replacement costs up forty-five percent,[6]The Zebra2025 Auto Insurance Trends Reporthttps://www.thezebra.com/resources/car-insuranc… and reinsurance repricing. All of those compound. All of them land on the cost of moving chicken from a processing plant to a restaurant on Lexington Avenue.

Then the Chipotle itself has insurance. Commercial property in New York is up 50–70% since 2019. Commercial auto up 40–60%. Umbrella liability up 60–100%.[7]Council of Insurance Agents & Brokers (CIAB); IvansQuarterly Market Surveys; Ivans Indexhttps://www.ciab.com/market-intel/ Then the person making the burrito has their own insurance costs. Auto up 55%.[8]ValuePenguin (LendingTree); U.S. Bureau of Labor StatisticsState of Auto Insurance in 2025; Consumer Price Index (motor vehicle insurance)https://www.valuepenguin.com/state-of-auto-insu… Their landlord's property insurance is up 75%, which the Fed has found gets passed through as rent,[9]Board of Governors of the Federal Reserve SystemRising Property Insurance Costs and Pass-Through to Rents for Apartment Buildings (2025)https://www.federalreserve.gov/econres/notes/fe… because of course it does. Health insurance deductibles are up 30–40%. That employee needs a raise just to break even, and the raise goes into the burrito.

Now do the math on the person buying it. A New Yorker earning $100,000 takes home about $79,000 after taxes, spends close to $40,000 on housing, which leaves roughly $39,000 for everything else. If they eat Chipotle five times a week, that's about $5,200 a year on a single lunch item, or nearly fifteen percent of their remaining discretionary income—on a chicken burrito with half a scoop of white rice—which is insane. The belief that this is insane is shared by millions of people, and that type of collective frustration at scale leads to behavior that is bad for society. This is why I genuinely believe that modernizing insurance systems is a matter of national defense. And why fintechs and financial institutions should be viewed as defense companies.

Everyone Is Leaving and Nobody Is Coming

According to the Bureau of Labor Statistics age distribution data, the industry employs about 2.8 million people. Of those, 1.37 million are 55 or older. Only 214,000 are between 20 and 24, imputing a 6-to-1 ratio of veterans to newbies.[10]Jonus GroupInsurance Talent Demographic Analysis (BLS-based)https://www.jonusgroup.com/blog/2025/10/insuran… More than 400,000 are expected to leave by the end of 2026[11]Insurance Business MagazineU.S. insurance sector workforce projection (~400,000 workers by 2026)https://www.insurancebusinessmag.com/us/news/br… and half the total workforce is projected to retire by 2028.[12]Skyscraper Insurance; Property Casualty 360Insurance industry retirement and employment outlookhttps://skyscraperinsurance.com/revolutionizing… For every 100 agents hired, 11 are still around after three years.[13]AgencyBlocInsurance agent retention research (why most agents quit within 3 years)https://www.agencybloc.com/agency-management-sy… CSRs churn at 30–45% annually.[14]OnEdge; ZippiaInsurance CSR and agency turnover estimateshttps://onedge.co/blog/mitigating-employee-turn… The industry hires roughly 800,000 to 950,000 people per year just to maintain headcount,[15]The Jacobson Group; AonSemi-Annual Insurance Labor Market Studyhttps://www.jacobsononline.com/insights/insuran… which means it effectively rebuilds itself from scratch every three years. And each rebuild is worse than the last, because the experienced people who were supposed to train the new people are the same ones walking out the door.

Rather than rethinking the model, or automating the functions that demonstrably cannot retain human beings, the industry's response has been: more bodies. Throw another hundred agents at the wall and hope that twelve stick instead of eleven. If Raytheon ran missile defense this way it would be out of business in a quarter and someone would probably go to jail. Insurance gets to do it indefinitely because nobody thinks of it as critical infrastructure, even though it is.

So why doesn't the industry attract builders who could fix this? Because the branding sucks. Four percent of millennials express interest in working in insurance.[16]Insurance Business Magazine; Slayton Search PartnersMillennials and insurance careers (survey coverage)https://www.insurancebusinessmag.com/ca/news/br… The industry has done zero brand work to make itself feel exciting or aspirational—nothing remotely comparable to what tech and finance did over the last two decades. Instead it fills the talent gap with warm bodies from Instagram ads put together by gurus with tic tac teeth promising six-figure commissions from home and then wonders why attrition looks like a war zone when it doesn't happen. The branding is so atrocious that the CEO of the largest insurance company in the United States was assassinated on a Manhattan sidewalk and millions of people responded with memes. That is what a collapse in institutional trust looks like for a product that society literally cannot function without.

AI Rewards Those Who Stay

This is where AI enters the picture, and before anyone casts me as the technologist who wants to gut the workforce, you should know that I actually think we're going to see an era of global job creation and a jump in employee satisfaction like never before. AI backfills roles that are already empty. It gives the people who stay better tools, larger books, higher earnings, and the ability to stop spending half their week training colleagues who are going to ghost in Q3.

And then there's the cost math. More than thirty cents of every premium dollar currently goes to sales, acquisition, servicing, and claims adjusting,[1]U.S. Department of the Treasury (Federal Insurance Office)Annual Report on the Insurance Industryhttps://home.treasury.gov/policy-issues/financi… which happen to be exactly the functions that are falling apart. If the industry compresses that thirty-percent operational drag to fifteen, it would be the single most significant reduction in the cost of insurance in a generation. Insurers wouldn't need to deny more claims or restrict coverage or do any of the things that make people hate them. They could increase profits and lower costs and actually win some goodwill, all at the same time, by implementing AI and reinvesting the savings into the people and systems that actually work.

The Duty to Deploy

I started this piece with Lockheed Martin and I want to end there, because I do believe that insurers should be viewed as Critical Infrastructure Providers required to abide by the same mandate as defense contractors. Both have a moral obligation to protect the people they serve, and a fiduciary obligation to use the best available technology and talent to do it. Failure by CIPs to abide by both those dual duties opens us all up to existential threats.

For those who still believe I'm being hyperbolic, remember that insurance determines whether Americans can own homes, start businesses, get life-saving treatment, build schools, and employ each other. When that product becomes unaffordable—when premiums rise fifty percent in six years because the industry can't service, sell, or adjust its way out of a self-inflicted labor crisis—the cost of failure is measured in foreclosures, shuttered businesses, literal death due to denial of life-saving medicine, and the slow erosion of the economic mobility that holds democracies together.

Every day that this technology is not implemented opens the door to rising rates on everyday goods and increased civil unrest. We have a duty to put this technology to use, and you can rest assured that the Gail team will be doing its best to contribute.

If you have questions on how to implement AI into your own business, feel free to shoot me an email at Matthew@meetGail.com or to even shoot me a text at 786-219-7367. I will give you my honest opinion on new tools or the best way to get started on your AI journey—even if it means recommending you to a provider that isn't Gail, as my sole goal is just making sure that my kids don't have to pay $40/burrito.