If you think<\/span> embedded insurance is the only hot thing in insurtech these days, we\u2019ve got a surprise in store for you: While it\u2019s true that startups that help sell insurance together with other products and services are enjoying tailwinds, there are plenty of other opportunities in the space, several investors told TechCrunch+.<\/p>\n

You see, insurtech startups often need to take into account the myriad rules and regulations in place when they seek to innovate and embed insurance into products, which might make it difficult to pull it off. And given the current emphasis on achieving cost efficiency to extend runways in the broader startup ecosystem, it appears investors are open to insurtech startups that can build a sustainable business model, regardless of it including embedded insurance.<\/p>\n

\u201cInsurtech startups that do not<\/em> offer embedded insurance, and rather provide other innovative solutions will still attract VC funding this year, especially if they can show cost-efficient and sustainable growth,\u201d said Nina Mayer, a principal at Earlybird.<\/p>\n

And according to David Wechsler, a principal at OMERS Ventures, \u201chaving an embedded strategy is not required for venture funding.\u201d<\/p>\n

Meyer added that there is particular interest in products that go beyond embedded insurance. \u201cWe are generally open to startups innovating any part of the value chain as long as the problem and market are big enough.\u201d<\/p>\n

This focus on cost efficiency instead of growth at all costs is driven by the same factors that affect startups more broadly. \u201cIt\u2019s been a turbulent few months for all tech sectors, including insurtech,\u201d said Stephen Brittain, director and co-founder of Insurtech Gateway.<\/p>\n

There\u2019s another reason why fundraising is harder for insurtech founders in 2023. Wechsler said, \u201cMany firms who dabbled in insurtech (A.K.A. \u201ctourist investors\u201d) have left the space. This makes it much more challenging to close subsequent rounds.\u201d<\/p>\n

On the flip side, he predicts that corporates with venture capital arms that are \u201ccommitted to the insurance sector will likely step up their involvement.\u201d<\/p>\n

This also seems true more broadly of venture funds with a strong insurtech thesis. \u201cWe are still bullish on insurtech and we have been active in 2023,\u201d said H\u00e9l\u00e8ne Falchier, a partner at Portage Ventures.<\/p>\n

But investors are being careful to not put all their eggs in one basket. \u201cBeyond embedded insurance, we are also particularly excited by solutions tackling claims prevention or underwriting in verticals such as climate or cyber,\u201d Mayer said.<\/p>\n

Artificial intelligence will likely take longer to demonstrate its full potential for the insurance sector, but its current applications are already being tracked actively by venture capital funds.<\/p>\n

Talking about generative AI and insurance, Astorya.vc\u2019s founding partner, Florian Graillot, reported seeing a lot of enthusiasm around that topic. He thinks that early use cases may center on customer service, but is certain that more will follow.<\/p>\n

\u201cThere is a lot more to expect from these generative AI solutions not only to smoothen the engagement with customers, but also to get a sense of customers\u2019 risks, collect documents in the claim process, or maybe deliver reporting to the regulator. We are clearly in the early days, whatever the industry!\u201d<\/p>\n

Read on to find out what insurtech investors think about where the sector is heading in 2023, why they feel IoT and parametric insurance are a hot opportunity, how Apple will change the game if it ends up launching its insurance product and more.<\/p>\n

We spoke with:<\/p>\n