Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
AI Opens New Market for Insurance Appeals
AI Innovation | Sep 24, 2025
Image: Freepik
From Health to Disability and Auto, AI Could Transform How People Fight Denied Claims
On September 16, 2024, Counterforce Health reported that U.S. platforms are using artificial intelligence to help patients appeal denied health insurance claims by analyzing rejection letters and generating tailored responses at scale.
The rise of AI powered tools is a growing insurtech trend where technology is being used to challenge entrenched industry practices that unfairly hurt consumers. For NCFA's community, the story raises important questions about where AI could play a similar role in our own insurance markets.
How AI Is Impacting Health Insurance Appeals in the U.S.
Let's look at the data to better understand the scope of the problem. In 2021, insurers on the federal HealthCare.gov marketplace denied about 17% of in network claims. These are services from doctors and hospitals already under contract with the insurer, showing that even approved providers faced a high denial rate.
Yet fewer than 0.2% of these denials were appealed, despite nearly 59% of appeals being successful when filed.
Separate research from the American Medical Association found that prior authorization denials are overturned more than 80% of the time when challenged, but only a small share of patients ever appeal.
The above figures point to a structural imbalance where insurers rely on consumers giving up. By automating appeal letters with expertly assessed supporting evidence, AI systems are changing the game.
Why Canada is Different But Not Immune
Canada’s universal healthcare system means most core medical services are covered publicly, so denials are less about hospital visits or surgeries and more about supplemental benefits such as prescription drugs, dental care, physiotherapy, and other extended health services. Private insurers play a major role in these areas, and disputes are common.
See: Calgary’s Modular Raises Key Insurtech Funding Round
What Canada lacks is transparent national reporting on denial and appeal rates. Unlike the U.S. system where denial data is published for marketplace insurers, Canadian insurers are not required to release such information. The limited statistics that do exist come from independent research or regulator snapshots, which highlight problems but don't provide a complete national picture. This lack of transparency creates a barrier to accountability and also an opportunity for Insurtech innovators.
High Denial Sectors in Canada
Even without standardized national data, the available evidence shows that denial issues are widespread across several types of insurance:
Disability insurance denial rates are high. For example, about 60% of Canada Pension Plan disability applications are rejected, a figure that highlights the steep barriers claimants face, even if it is not directly comparable to private disability insurance.
In Quebec, 20% of critical illness and life insurance claims are denied according to the Autorité des marchés financiers. Disputes often stem from exclusions or non-disclosure clauses.
Extended health and drug benefits. Expensive specialty drugs and therapies are frequently denied as “not medically necessary” or outside policy coverage. Appeal processes can be slow and opaque.
See: Quandri Raises $12M to Scale AI Automation in Insurance
Accident benefit disputes are frequent, especially with auto insurance in Ontario. The provincial tribunal system handles thousands of contested denials each year. AI insurtech solutions could help provinces reduce backlogs and streamline case processing.
Property insurance denials are common enough. Regulators report that property insurance denial ratios are around 16%, with most rejections tied to lack of coverage.
The Insurtech Opportunity
For fintech and Insurtech players, the opportunity spams the broader insurance ecosystem. AI could provide consumers with tools to navigate opaque processes, improve transparency, and reduce the cost of disputes.
Regulators have already outlined pan-Canadian guiding principles for responsible AI in health systems (Health Canada), establishing an innovation framework that balances fairness and accountability.
With insurance denial data so limited in Canada, new platforms that integrate appeals with data collection could simultaneously drive consumer protection and market competitiveness.
Outlook
Denial data transparency can expose inefficiencies between insurers and individuals and AI solutions can help rebalance power. While Canada’s insurance system is structured differently than the U.S., denial disputes are still widespread and certainly costly in terms of time and money for stakeholders.
Read: CVCA: Ontario and AI Drive $297M in Seed Deals H1 2025
Fintechs and insurtech innovators should view this is a market opportunity while also protecting consumers. Canada can either wait for U.S. platforms to cross the border, or develop homegrown solutions that lead in fairness, transparency, and competitiveness.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create aa vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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