As Next Insurance makes its first acquisition, insurtech looks energetic

A snapshot of recent activity in a bustling startup category

Next Insurance, a startup that competes in the small business (SMB) insurance market, announced this morning that it has acquired its first company.

Purchasing Juniper Labs will help the unicorn boost its in-house data science team, and the smaller firm’s predictive analytics technology may be applied across the acquiring company’s portfolio of insurance products.

Next Insurance raised $250 million earlier this year at a valuation of $2 billion, making it one of the richest startups to compete in the broad insurtech niche.

After speaking with Next about its acquisition and digging into its economics and recent growth, The Exchange also examined Getsafe’s recent round (European digital insurance startup), took a look at NOW Insurance’s latest investment (commercial insurance startup) and asked Noyo’s Shannon Goggin to fill us in about the insurtech VC startup market itself, given that her health insurance API company just raised its Series A.


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The combined picture that appears is one of an active market, likely accelerated by the IPOs of insurtech unicorns Lemonade and Root, Hippo’s latest megaround and Metromile’s impending public debut via a blank-check company.

Adding to the snapshot of bustling activity, TechCrunch recently explored funding trends in the insurtech sector, which is on track for a record year of venture rounds and venture dollars, provided that the fourth quarter comes close to the year’s average through the third quarter.

There are some concerns, including accounting shakeups at some leading insurtech players as they change cede premiums, the result of which is smaller revenues and stronger margins. How investors will weigh their new economic profiles is not yet clear.

Let’s dig into Next Insurance and then collate a few other recent data points to expand our understanding of one of startup land’s most interesting genres.

Next Insurance and friends

Next Insurance announced its Series D in September of this year, adding $250 million to its accounts at a valuation described by Crunchbase News as more than $2 billion. What stood out about the round at the time was not that it was so very large, but that it was the second time in less than a year that the company had announced a $250 million round. Its Series C was detailed in October of 2019 and was also worth a quarter billion dollars.

Next didn’t detail new growth metrics to TechCrunch, sticking to the same figure that it shared around the time of its Series D, namely that it had grown its gross written premium (a metric that could be considered related to billings if we were comparing it to software metrics) by 133% in the last year.

What does the company do? Small business insurance across a number of verticals. Chatting with COO Sofya Pogreb, we got a scratch at the economic profile of that particular slice of the larger insurance world. Next manages its products to a 60% loss ratio (loss ratio combined with loss adjustment expenses, we confirmed), a metric that will leave plenty of effective margin to finance its own operations if the company can meet it. Next Insurance told The Exchange that it is on target to reach its goal loss ratio.

Next has expanded into new products over time, adding workers comp insurance in 2019, general liability in 2017 and so forth. CEO and co-founder Guy Goldstein told TechCrunch that as his company supports different products, their operations become more complex. Add in that the company wants to insure a host of different types of small businesses across the United States, and it’s a multiplex business.

Enter Juniper Labs. The company, while small, has built an engine that allows it to scrape public data, apply natural language processing to structure the information and use predictive analytics on top of the resulting dataset so that it can better price risk. Next Insurance wants its humans and code. Its staff will expand Next Insurance’s data science group and its tech will be applied to Next’s products in time.

But Next Insurance’s rapid-fire fundraising and newly discovered acquisitiveness are only a piece of the recent insurtech news cycle. Let’s keep going.

Insurtech

TechCrunch has covered Noyo a few times in the last year. The startup builds APIs for the insurance market, a bit like what Plaid set out to do for fintech.

Given that Noyo’s Series A was just a few months back, The Exchange reached out to CEO and co-founder Shannon Goggin to get her views on the venture market for insurtech.

Earlier this week, Noyo announced a deal with Namely, an HR-focused software company that serves the midmarket. Via email, Goggin said the deal will have a “welcome positive financial impact.”

Because the company had just landed a deal of sufficient size that it put out a release about the event, I asked Goggin if her company was already hearing from VCs interested in putting more money into Noyo. After discussing how large the market opportunity is for her startup in an email, she said, “The short answer is yes, there is a close interest in our unique approach from VCs and partners.”

Both items help us understand where the insurtech market is. First, that Noyo is landing larger customers shows that there is appetite amongst more traditional insurtech players (Namely was founded in 2012) for new methods of doing business; for insurtech startups that are looking to power insurance providers, that’s good news. And that venture interest remains high is good for the category in aggregate, period.

Younger startups in the mix are also attracting interest. Just this morning, NOW Insurance, a Houston-based startup that focuses on business insurance, raised $1.25 million, bringing its most recent round size to $2.5 million. Not huge numbers, of course, but from small seeds grow mighty Series Bs? Something like that.

There’s still more insurtech news to talk about. Earlier this week TechCrunch covered Getsafe’s latest round, a $30 million Series B. Described by our own Steve O’Hear as a “digital-first insurance startup that initially launched with an app for home contents insurance,” the company has racked up 150,000 customers so far. And as Getsafe is German, we can infer that the market for insurtech products is global.

Even more, Getsafe CEO Christian Wiens told TechCrunch that “insurtech is one of the few industries VCs have been highly interested in despite [COVID-19],” though the executive added that “raising in the second half of 2020 was easier than during the first lockdown.”

But Wiens is bullish on European insurtech, adding in the same email that seeing the “first substantial Insurtech M&A deals in the U.S.” this year means that Europe could catch up in the next. He anticipates European insurtech IPOs as well, saying that Getsafe will go after a debut in one to three years.

Bring on the IPOs.

Anyway, you got all that? Here’s a summary: Next Insurance is rich, growing quickly and now has a taste for smaller companies. In the meantime, Noyo could raise more capital minutes after its Series A if it really wanted to and there are other rounds aplenty in the rather broad insurtech startup market.

Expect to keep hearing about insurtech for quarters and quarters to come.