Next Insurance raises $250M to $4B, Next Business Insurance Review 2023
Next Insurance recently announced that it has raised a $250 million round, valuing the SMB-focused insurance provider at $4 billion. The company last raised another $250 million in September 2020, at a valuation of $2 billion. This funding also comes after Next Insurance acquired Juniper Labs in December, and AP Intego more recently.
Next sells small-business coverage across a number of categories (workers’ comp, commercial auto, general liability, etc.) for different classes of workers. Think fitness companies, or construction concerns. Put together, Next’s bet is that its ability to price coverage across different categories and industries will allow it to scale its gross written premium (GWP) quickly by attracting myriad small businesses, and upselling them to other products over time.
Next Insurance’s new round and new valuation come at an interesting time for the insurtech space more broadly. Some air has come out of Lemonade’s share price, the rental-insurance unicorn being an early public debut for the broader tech-enabled, neo-insurance niche.
Since Lemonade’s debut, we’ve seen Root Insurance go public as well. The car insurance tech startup has struggled since its debut, losing value and attracting lawsuits despite besting investor growth expectations. MetroMile, another neo-insurance company focused on automotive that went public via a SPAC-led combination, has been slightly uneven since starting to trade. Hippo, which focuses on home insurance, intends to list via a SPAC itself at a $5 billion valuation.
Inside those numbers you can find optimism, and some lackluster trading results. How to parse the mix will depend on one’s perspective.
For Next Insurance’s backers, however, it’s all systems go. And there’s reason to believe that their enthusiasm is not misplaced, despite some chop in Next’s broader market.
Next says its GWP doubled in the half-year after its last round. That makes its valuation doubling seem somewhat reasonable — if private investors were willing to pay for its shares at a certain GWP multiple, why not re-up at double the price and double the GWP while the company continues to scale?
Just how big is Next today? It reached a GWP run rate of $100 million back in February of 2020. And it reached a $200 million GWP run rate in February of this year. So, larger than that by a few months’ growth, exclusive of the AP Intego business, which had around $185 million in active premium around the time its deal with Next Insurance was announced.
To clarify the numbers, TechCrunch reached out to Next Insurance for detail on when it doubled its GWP, and when the AP Intego deal started to count toward its numbers. Per an email from CEO Guy Goldstein, the doubling metrics regarding GWP was “in relation to that 2020 figure and [was calculated] before the AP Intego acquisition.” So, we can presume that the firm is now well north of the $200 million GWP run rate that it had previously cited.
Finally, TechCrunch asked the company about the SPAC boom and if it intended to avoid that rapid path to the public markets. “We’re always evaluating our options, but right now, the main focus remains on growing the business,” Goldstein responded.
That’s a no.
Next Insurance is a business insurance company that sells policies online. You can purchase business insurance policies individually or in packages tailored to specific industries, like construction, child care and fitness. Next users can access and share their certificates of insurance digitally and manage their claims online.
Next is a good fit for small-business owners who need coverage fast and want to manage their policies digitally. While Next was only founded in 2016, it handles its own claims and is independently rated by AM Best, unlike some other online business insurance companies.
If your business requires specialized types of coverage, Next may not offer everything you need. NerdWallet recommends getting quotes from several providers to find the best coverage for you.
Next Insurance: Pros and cons
Easy online application allows business owners to sign up in minutes.
Traditional business owners who prefer paper records may find the digital claim process unfamiliar.
You can get up to a 10% discount on bundled policies.
Some specialized types of business insurance, like key person insurance, are not available.
You can access your certificate of insurance online and share it with others digitally for free.
Next business insurance products
Next offers a number of policies that can be purchased individually or bundled together for up to a 10% discount. As a general rule, businesses that carry less risk, such as online publishers, tend to pay less for insurance coverage than high-risk industries such as construction.
Business owner’s policy
Next’s business owner’s policy combines general liability and commercial property coverage, including business income insurance.
A BOP is a good idea for small businesses seeking:
A single policy that provides multiple types of coverage.
Insurance for a physical business location, equipment or inventory.
General liability insurance
General liability insurance, also called business liability insurance, protects you and your company when you are responsible for paying someone’s medical expenses, attorney fees or damage.
Next offers this product as part of a BOP or as an individual policy.
Commercial property insurance
Commercial property insurance, or business property insurance, protects your physical place of business in the event of damage or loss. Business personal property can include inventory, furniture and equipment, as well as any signage, storage sheds, landscaping and fences.
Commercial property insurance is the second component of coverage bundled in Next’s BOP, but it also can be purchased as an individual product.
Business income insurance
Next users can include business income insurance, also called business interruption insurance, as part of a BOP or purchase it as an individual product.
Business interruption insurance protects your company’s money and assets when business operations are disrupted by circumstances out of your control. This type of coverage can help you pay for lost business income, payroll, taxes, any temporary expenses that can arise as a result of missed operations and more.
Workers’ compensation insurance
Workers’ compensation insurance is required in many states for businesses with employees — and in some cases, contractors need to be covered as well. Workers’ comp can help pay for medical expenses, lost wages, survivor benefits, long-term disability and other costs incurred when your employees suffer injuries or illnesses that are related to work.
Self-employed business owners can even benefit from workers’ comp for themselves to cover any expenses that may not be covered under their personal health insurance policies.
Next Insurance says its workers’ comp can cost as little as $14 per month depending on the size of the company and can be bundled with other packages for additional discounts.
Professional liability insurance
This type of insurance protects you against claims that your professional service or advice caused someone harm. This can include accusations of business errors or poor financial outcomes, as well as claims of negligence and more.
Next offers the same policy under two names: professional liability insurance and errors and omissions insurance. These terms are often used interchangeably to talk about the same type of coverage.
Tools and equipment insurance
This type of insurance provides extra coverage for specialized or expensive equipment that can be pricey or difficult to replace. Tools and equipment insurance can help keep your business operating when you need quick replacements or repairs.
Next offers this coverage as an add-on to a general liability insurance policy.
Commercial auto insurance
Commercial auto insurance protects your company when you or your drivers are involved in auto-related incidents that result in damage or injury to yourself and others.
Hired and non-owned auto insurance can be added onto a commercial auto policy for companies that use rented vehicles to do business. Most auto insurance policies apply to vehicles that you own only, so hired auto insurance protects you and your employees if you get in an incident involving a rented car or truck.
Should you purchase Next business insurance?
Next Insurance is a good fit for business owners who:
Prefer an all-digital approach to managing their insurance coverage. Next Insurance provides easy online service and support. You can submit insurance claims directly through the online customer portal as well as over the phone. You can also access your certificate of insurance and add additional insureds digitally.
Don’t need an insurance agent, but want some personal support. When you’re shopping for insurance, Next has advisors who can help you understand your options. And if you have to file a claim, you’ll be paired with a claims advocate you can call, text or email throughout the process.
Run smaller businesses that don’t have specialized insurance needs. For particular types of business insurance, like builder’s risk insurance or key person insurance, you may need to turn to a more-established provider. Next, like most business insurance startups, focuses on common types of coverage.
Alternatives to Next business insurance
If you want to explore Next insurance alternatives, try these options.
For several quotes at once: If you’re focused on finding cheap business insurance, try shopping with an online insurance marketplace like Simply Business. Simply Business will generate quotes from several different insurance providers, and you can purchase one online. But you’ll manage your policy through that provider, not Simply Business.
For quick, temporary coverage: Thimble is another business insurance startup that sells policies online. Thimble offers coverage by the job or on a monthly basis, so if you only need business insurance for an event or another temporary engagement, it might be a good option. Thimble sells policies from other insurers, though, and you’ll work with those insurers if you need to file a claim.
For a wider variety of coverage types: Chubb is a longstanding provider that offers virtually every type of business insurance. You can only purchase a limited number of policies online, but can work with an agent to get fully covered.
How to get a Next business insurance policy
Since Next may require you to upload digital copies of some business documents, it’s a good idea to have the following information on hand before beginning your online application:
Basic information about your business, including your annual sales receipts.
Where applicable, construction details on any buildings you own including age, material and square footage.
The number of workers you employ, as well as their employment information. Some states require workers’ compensation coverage for contractors as well.
For commercial auto or fleet insurance, you will need to list your vehicle types, vehicle identification numbers and the names of any drivers.
Details on any prior insurance claims your company may have made.
While business owners can apply for a Next business insurance policy on its website, those who prefer speaking with an agent can call 855-222-5919 for assistance.