Israeli insurtech co Next Insurance raises $83m

Next Insurance founders Photo: PR

Next Insurance sells tailor-made policies for small and medium-sized US businesses.

Kfar Saba-based Next Insurance has raised $83 million in a B funding round, bringing the total raised by the company to $131 million. Next Insurance, an insurance company focusing on insurance for small and medium-sized businesses in the US, was founded by CEO Guy Goldstein, CTO Alon Huri, and VP R&D Nissim Tapiro. The company, which initially operated in the US as an insurance agency and sold policies of other insurance companies, became an insurance company itself in seven different US states and intends to obtain a license for the other 43 US states within two years.

Before founding Next Insurance, Goldstein, Huri, and Tapiro founded Check, which developed an application for monitoring users' bank accounts. Check was sold to US company Intuit in 2014 for $360 million in cash and the three men founded Next Insurance shortly afterwards. Huri told "Globes" that their reputation helped them raised large amounts of capital at an early stage.

Redpoint Ventures led Next Insurance's current round with participation from the company's existing investors, including Nationwide Insurance, Ribbit Capital, American Express Ventures, Munich Re, and three Israeli investors: TLV Partners, SGVC (controlled by managing partner Dovi Frances), and Zeev Ventures (controlled by founding partner Oren Zeev). The company currently has 60 employees, including 30 in Israel. Huri says that they are planning to triple the number of employees during the coming year.

"Today, no company dominates the market"

The market for insuring small businesses in the US is estimated at over $100 billion. In contrast to home and auto insurance, which include 5-10 types of insurance, insurance for small businesses covers thousands of types of businesses and consequently thousands of types of insurance. The existing insurance companies sell standard general policies at a fixed price, which does not suit the special needs of businesses and self-employed people and does not cover the risks to which they are exposed. For example, a photographer needs coverage for photography equipment, while a repairman will prefer covering his car. Each of them is exposed to different risks that are expressed in a different price.

Next Insurance, which specializes in small and medium-sized businesses, issues policies tailored to each type of business. Huri explains that in this way the company can offer relevant coverage and a lower price than its competitors. "In the US, we're talking about a market of $135 billion a year. One of the interesting things in the world of insurance for small businesses is that it is very difficult to enter because there are thousands of types of occupations. Today, no company dominates the market; the largest company has a 5% market share. We're now selling policies for tens of millions of dollars a year," he says.

"We don't work with insurance agents"

Next Insurance has no branches or agencies; it offers insurance online. It is also developing artificial intelligence and big data technologies and beginning to use them to detect fraud.

"The big revolution of insurtech companies is that they are making insurance accessible to the customer," Huri explains. "The current process is inefficient and not to the customer's benefit in two respects: the agents want to sell more insurance policies, even if the policies are unsuitable for the customers; and the insurance companies want to pay fewer claims.

"On principle, we don't work with all of those agents. An insurance agent gets an 8-15% commission on the insurance he or she sells, so selling online saves us a lot of money. We use technologies that conventional insurance companies don't use as of now. As soon as the process happens online, there are many variables that enable us to do a much better job of calculating the risk."

"Globes": Wouldn't you prefer paying fewer of the customers filing claims under their policies?

Huri: "We believe that insurance is designed for people who really need it and when they need it. We check how fast we pay a customer who files a claim in comparison with other companies. In contrast to other companies, we don't try to optimize the process in such a way that we don't pay the customer money for a claim. We want to pay honest customers. There is, of course, insurance fraud and we have the tools to deal with it."

Published by Globes [online], Israel business news - www.globes-online.com - on July 12, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Next Insurance founders Photo: PR
Next Insurance founders Photo: PR
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