Next Insurance, a startup that wants to make it simpler for small businesses to find coverage, has raised a $29 million Series A. The round was led by Munich Re/HSB Ventures, the venture capital arm of German insurance company Munich Re. Existing investors including Markel and Nationwide, also participated.
Next’s last funding was a $13 million seed round announced in March 2016.
Next customizes insurance plans for business sectors that are often overlooked by insurers. Currently, small business owners often rely on price comparison websites to figure out what kind of coverage they need and where to buy it, though that means the plans they get don’t always cover all their needs. Next began selling insurance tailored for personal trainers, including liability insurance, at the end of last year and recently started serving photographers and contractors as well. Its Series A will be used to expand into other verticals and build its own insurance products.
“The complexity of the small business insurance market is very significant and this leads to a situation where even the largest insurance providers own less than 10 percent of the small business market,” said founder and CEO Guy Goldstein in an email. “This offers us huge growth potential as we aim to specialize in and become a market leader in each small business vertical.”
The startup acts as a managing general agent, which means that Next can develop and sell its own insurance products. It partners with insurance carriers who underwrite policies and makes money by taking a commission from each sale.
Goldstein said that Next’s founding team discovered “how cumbersome and confusing getting a small business insured is” while launching other companies. The startup wants to improve transparency by presenting its policies “in a very straightforward way” and getting rid of hidden fees and exemptions.
Almost all of small business insurance sales are currently done offline through agents and can take weeks to complete, Goldstein noted. As an alternative, Next’s site gives customers a quote after they fill out a questionnaire and, if they want, they can buy coverage within minutes. They can also purchase insurance through a Facebook messenger chatbot.
Since insurance agents usually serve one area, it’s hard for them to gain wide knowledge of specific business verticals, he added.
“What this means is that agents cannot gain expertise in the requirements and the unique needs of each type of business—specializing in many different sectors is a very difficult feat for one human being,” said Goldstein. “What we can do with our technology, data, and AI is gain a deep knowledge of each profession in order to tailor the right products to a business.”
Other tech startups that also want to upend various aspects of the traditional insurance industry include Lemonade, Hippo, Jetty and Quilt.