By Sumi Das, Partner at CapitalG
Next Insurance is building a “one-stop-shop” for small business insurance, leveraging technology to create a vastly superior customer experience. We are thrilled to partner with co-founder and CEO Guy Goldstein and the extraordinary Next Insurance team to support them in their journey.
America’s Small Businesses Need Insurance Urgently
The Covid-19 crisis has had a severe and heartbreaking impact on small businesses in the U.S. Since the pandemic’s outbreak, nearly 75,000 small businesses have closed permanently, and, according to U.S. Chamber of Commerce data, ~70% of the country’s remaining 30 million businesses are worried about continued financial hardship stemming from the Covid-induced economic downturn.
During this period of staggering financial stress, small businesses need appropriate insurance to help them stay viable through protection from risks such as litigation, employee work-related injury or loss of property. The wildfires raging across the Western U.S. and dangerous storms ravaging the South further underscore the critical need for protection from loss of property. Unfortunately, ~40% of U.S. small businesses are uninsured, and ~75% are under-insured.
Small Business Insurance is a massive $140B market, yet incredibly underserved
The current small business insurance experience is broken. Small businesses consistently cite prohibitive cost barriers and lack of transparency surrounding coverage as their major reasons for not acquiring insurance. This failure on the part of insurance companies has created a colossal and unfair economic burden for small businesses.
The Small Business Insurance Market Is Broken, Leaving Businesses Exposed and Unsupported
America’s small businesses are highly diverse, broadly distributed across over 1,000 verticals. They range from individual sole proprietors to mid-sized companies up to a hundred employees. Each business is unique and requires different insurance products and coverage. A one-person yoga studio may seek general liability coverage, while a contractor will likely focus on workers’ compensation.
Managing this complexity is critical to serving small business insurance profitably. Today, however, the market is primarily served by legacy insurance companies who operate manually. In order to manage their risks, they build highly punitive underwriting criteria, say no to a lot of applicants and offer “one-size-fits-all” policies to their customers. This results in both an extremely unsatisfactory customer experience and, more importantly, a widespread lack of sufficient insurance protection.
Our research consistently indicated that the process to get a small business policy is extremely manual, taking weeks and often resulting in denial, inadequate coverage or unsustainable pricing
Next Insurance is a 10x Leap Forward for America’s Small Businesses
Next Insurance has fundamentally reimagined the insurance experience using technology to innovate each step in the customer journey. Next Insurance uses machine learning to underwrite customers, offers tailored coverage for each business type and has fully automated onboarding and customer interaction.
Take for example the general contractor who previously needed to go submit paperwork and then wait for weeks to get the required insurance to start a job. With Next Insurance, the same contractor can go online, get a quote and purchase a policy in 10 minutes or less at a cost savings of up to ~30%. Importantly, Next Insurance also dramatically speeds up the pace of business while reducing squandered time. Customers can immediately obtain a certificate of insurance, giving them an edge over the competition by eliminating any paperwork challenges and providing proof of coverage with the click of a button, anytime, anywhere.
Next Insurance has a 76 Net Promoter Score — something totally unheard of in the insurance industry
Speaking with a number of Next Insurance’s customers was an absolute delight. It became abundantly clear from these conversations that Next Insurance is offering a 10x improved experience across every facet of the customer experience — from underwriting and onboarding to claims handling. Next Insurance has managed to transform small business insurance from a necessary evil into an efficient, smooth, and pleasant experience. Unsurprisingly, their superior customer experience has rapidly translated into impressive growth: Next Insurance now serves 100,000+ customers across all 50 states and in just under three years, offers six insurance offerings including General Liability, Professional Liability, Commercial Auto and Workers’ Compensation coverage, all under one roof.
CapitalG’s Investment in Next Insurance
At CapitalG, it is our privilege to back extraordinary entrepreneurs building transformational companies. Guy Goldstein and the entire Next Insurance team fit that description exquisitely, bringing with them a wealth of experience spanning the global technology and financial services sectors. Guy and co-founders Alon Huri and Nissim Tapiro built Check, a mobile payments company acquired by Intuit for $360 million. They’re joined by world-class leaders Michelle Cheung, CFO, and Sofya Pogreb, COO, who bring deep financial services experience from their tenures at Goldman Sachs and PayPal, respectively. We believe that Guy and team are perfectly positioned to capture this consequential and important opportunity.
We are excited to lead Next Insurance’s $250M Series D financing and to support the team in their journey to help America’s small businesses not only survive the pandemic but also thrive today and beyond.
Contributors: Nina Gerson