Insurtech Next Insurance has pulled in a $250 million financing round from a single investor: Munich Re.
Palo Alto-based Next said it plans to use the Series C cash infusion to scale up its small business insurance products and expand its customer base. Including the new funding, Next has raised $381 million in three years since its launch, and the three-year old firm claims to have a valuation that surpasses $1 billion.
With the new Munich Re financing, Next joins the elite ranks of insurtechs that have raised hundreds of millions in financing. Lemonade, which sells home and rental insurance electronically, disclosed a $300 million financing in April that’s designed to fuel an international expansion. Lemonade has raised $480 million in venture financing thus far from multiple investors including Allianz and AXA investment arm XL Innovate.
In September, Root raised $350 million in a Series E round that included multiple investors, bringing its total to with $525 million in financing since its 2015 launch, plus an additional $100 million in debt financing. The Ohio-based Root said it will use the money to accelerate expansion of its online auto insurance business and develop new products.
The entry of Munich Re as a large, single investor in a given round is unusual for insurtechs to date, though the German reinsurer has been a Next business partner, reinsuring Next proprietary policies sold on State National, a fronting company for the Next program. Next Insurance began as a managing general agency but last year it ditched its agency status to become a licensed insurance carrier. It sells its proprietary policies either on Next carrier paper or State National paper depending upon in which state the policy is sold.
Joachim Wenning, Munich Re chairman, said that his company’s investment helps fuel the bigger picture growth trajectory for both Next Insurance and Munich Re.
“Next Insurance’s data- and technology-driven business model offers outstanding growth opportunities, which we will harness together,” Wenning said in prepared remarks. “Next Insurance will benefit from our expertise in primary insurance and reinsurance. It also helps Munich Re expand its footprint in the promising insurance market for small and medium-sized commercial customers in the United States. We are confident that building on our proven collaboration will benefit both Munich Re and Next Insurance.”
Guy Goldstein, Next’s co-founder and CEO, cited his company’s history with Munich Re. “We have been working with Munich Re since the beginning, and they have been a great partner in helping us grow and develop our business,” Goldstein said in prepared remarks. “This new investment will continue to help us grow our team, develop our technology, deliver phenomenal service and accelerate customer growth.”
Next Insurance provides small business insurance nationally through a digital platform, with a focus on allowing business customers to acquire all of their property/casualty insurance products in one place. It targeted accounts currently include contractors, construction, consultants, fitness instructors, cleaning companies, beauty salons, therapists, entertainers, educators and others. Coverage options include general liability, professional liability, commercial liability, commercial auto and workers’ compensation. The company touts its coverage as targeting “over 1,000 unique types of business with policies that are tailored to their needs, simple to understand and affordable.”
Next also offers Live Certificate, a real-time certificate of insurance verification, plus an online portal where policyholders can manage their insurance by adding additional insureds, updating policy or payment information, and sending a proof of insurance from a smartphone or computer.
Goldstein in the recent past has predicted a future without agents due to insurtech advances in the digital buying process. But Next changed that messaging in September when it launched Next for Agents, a portal designed to help independent agents quickly quote and sell its policies. The company said it had heard from small business owners who prefer to work with an independent agent and wanted to accommodate them.
Founded in 2016, Next’s capital funding has come from MunichRe, Redpoint Ventures, Nationwide, Markel, American Express Ventures, Ribbit Capital, TLV Partners, Group 11, and Zeev Ventures.
Munich Re has been among the most active insurance carrier investors in technology-driven startups. In addition to Next, its partners have included Trov, Lemonade, Root, Slice, Bunker, Bought By Many and Helium.