Small business digital insurance provider Next Insurance has raised $83 million in a Series B round led by Redpoint Ventures. Other participants include previous investors Nationwide and Munich Re, along with American Express Ventures, Ribbit Capital, TLV Partners, and Zeev Ventures.
Next Insurance previously raised a $13 million Seed round in March 2016 followed by a $35 million Series A round in May 2017. Its latest capital infusion brings its total known funding to $131 million.
Founded in 2016, Next Insurance aims to provide small business owners with affordable, high-coverage insurance.
“Brokers are not always experts in the exact type of business that they are talking to,” Next Insurance COO Sofya Pogreb told Crunchbase News in an interview. “As a result, most of the time they are not necessarily tailoring the product for the customer.” Pogreb noted that many of the customers that come to Next Insurance have been sold insurance that doesn’t cover all of their needs or are paying for packages that include unnecessary coverage.
Next Insurance started off as a distribution platform and, like many of its competitors, worked with traditional carriers to sell insurance products online. A year later, however, the company began selling its own insurance packages. Pogreb told Crunchbase News that the pivot was a result of critical challenges that arose when working with traditional partners.
“We found that these traditional carriers most often operate on legacy platforms. These are very inflexible systems, they take months to integrate with, they take a lot of maintenance,” Pogreb explained. Due to these hindrances, sales were lost. Furthermore, a need for more control over the pricing and fees pushed the company to branch off.
“We’ve done away fees completely, and we’re able to do that because of our leaner expense structure,” Pogreb said. “Having our own product gave us control over pricing [and] coverage. We made sure that we’re more comfortable and proud of the product that we are selling.”
Small business owners can now go on to Next Insurance’s website, choose their industry, and select a Basic, Pro, or Pro Plus package depending on their need. Customers can submit a request for quote and purchase a package within minutes. According to its website, general liability and personal injury insurance is included with all insurance packages.
In selling their own product, with past experience in the industry, the company’s first product was geared toward the construction vertical, and it now sells products for professional services.
“One of the challenges we’ve spent a lot of time discussing is how do we become an expert in each and every vertical that we serve,” Pogreb expressed. “That’s part of our challenge as we scale.” Pogreb explained that the company is focused on fine-tuning its products in those verticals.
The company will also use the new funding to expand into new verticals, most likely retail, as well as offer more products within existing verticals. Next Insurance also plans to increase headcount and invest in its back-end technology.
“We’re looking to increase the sophistication and usage of machine learning technology and AI in how we make customer underwriting and pricing decisions,” Pogreb said. With that investment in AI, Pogreb said Next Insurance aims to be able to improve its potential customer validation process, further incorporate product reviews through its online funnel, and leverage business’s online footprint to improve the underwriting and pricing processes.
Illustration Credit: Li Anne Dias