2019 was another record year for investment into insurance technology companies, with investors putting a total of $6.3bn to work. This was up 50% from c$4.2bn in 2018, according to Willis Towers Watson.

Investor dollars have been spread unevenly however, with full-stack B2C carriers and distribution companies attracting most of the funding. A relatively minor $900m was invested into B2B insurtech.

The support for full-stack insurance startups was particularly remarkable given the challenges that model faces: Building a full-stack insurance company is an expensive business. Four companies alone raised $1.4bn in 2019 to support their transition to a fully-fledged insurance company: Clover Health ($500m), Root ($350m), Lemonade ($300m), Next Insurance ($250m). 

The capital flowing into full-stack startups partly reflects the frustration of founders who want customers to have a fully-digital experience, and have been frustrated by the slowness of incumbents in adopting technology to allow for a digital customer journey from end-to-end. 

We continue to believe there are significant opportunities for software companies that can solve problems for incumbent players. For now however, the venture market is betting that it's faster to build a new insurer from the ground up than undertaking wholesale renovation on incumbent core platforms.