The news: IRYS raised $12.5 million in seed funding. The company sells technology for insurance companies—what it calls “an insurance operating system”—instead of trying to disrupt the industry with a competing offering.

Exzeo Group, which attacks similar problems, just went public.

How we got here: After years of insurtechs trying to disrupt the industry and incumbents buying them up, investors are betting on a new wave of insurtechs trying to modernize the industry’s core infrastructure.

IRYS’s platform automates internal workflows and connects brokers and insurance carriers with a modern, API-native system designed to replace outdated agency management tools.

The appeal: The insurance back office is notoriously manual, even after years of digital transformation in other parts of financial services. The appeal is efficiency: helping insurance brokers handle more volume with fewer steps.

Efficiency is held back by creaky technology that underpins the insurance business. Many carriers still rely on decades-old systems that are costly to maintain and difficult to integrate with new tools. These limitations slow down day-to-day tasks like claims processing.

The future: Insurers, like other financial services companies, are migrating their systems to the cloud. Infrastructure-focused insurtechs are positioned to facilitate that transition without forcing immediate, risky changes to the systems that industry participants have used for decades. Insurtechs that bridge this gap lower the downside risk of digital transformation.

EMARKTER has noted that the insurtech sector is evolving to support infrastructure changes. Agentic AI is driving automation across the value chain; chatbots and virtual assistants make data collection and claims processing more efficient; predictive analytics help insurers forecast claim trends; and enhanced models are improving fraud detection.

Our take: Insurtech still undoubtedly competes with legacy insurers and other parts of the insurance value chain—for example in P2P and on-demand insurance, telematics and usage-based insurance, and microinsurance.

But they’re also fast becoming reliable partners. Updates to insurance industry systems, now frequently enabled by insurtechs, are long overdue. Insurers will need to work with these startups to keep up with nimble customer-facing competitors.