Insurtech Next Insurance Ditching Agency Model to Become a Carrier

By | May 24, 2018

The company says it has received its first license from Delaware and expects to be licensed in several states by the end of 2018 and eventually in all states.

In moving from being a managing general agency (MGA) to a full-fledged carrier, the commercial lines insurtech believes it will have greater freedom over its underwriting, policies, claims and customer experience.

“Until now, we have been operating as an MGA, which was a step on our path toward becoming a carrier,” Guy Goldstein, co-founder and CEO, told Carrier Management in a series of questions-and-answers on the move. “As a carrier, we want to be able to take some of the risk of insurance upon ourselves and to be able to offer fully tailored products to entrepreneurs. This will allow us to better control the holistic experience and to continue to innovate faster.”

Goldstein said becoming a carrier requires significant effort and financial backing. “It has taken us more than two years to get to this point,” he said.

While Goldstein believes going the carrier route makes sense now for Next, it may not be the answer for all insurtechs. “Other companies may have different goals than we do, leading to alternative strategic directions,” he said. “There’s more than one way to be a successful insurtech company.”

Next’s platform simplifies the insurance process for small business owners and gives them more control over their policies—including letting them manage and cancel on their own. Next uses data analytics to create policies tailored to the unique needs of different classes of business. Target markets thus far have included personal trainers, yoga instructors, landscapers, carpenters, janitorial services and photographers.

Why take this step now?

“Small business insurance was stagnant for many years. We are rebuilding it from the ground up with new, fresh and innovative thinking,” Goldstein told Carrier Management.

“As a carrier, we are able to move more quickly to meet the market’s changing demands—creating policies to meet the needs of today’s entrepreneurs and simplifying the policy purchasing process by asking far fewer questions. Being a carrier also enables us to utilize a tailored, risk-based pricing model, which will reduce prices for low-risk customers,” Goldstein added.

Like some other insurtechs, Next has published certain sales information on its website. This data shows that by the end of 2017, it had sold $5 million in premium. It took 400 days for it to reach $1 million, then 33 days to hit $5 million. As of December 2017, its written premium run rate is $8.7 million—this is the total for all of 2018 if every month of sales matches the December total.

The insurtech has been attracting insurers as investors. Since its founding in 2016 in Palo Alto, Calif., Next has received a total of $48 million in venture capital funding from Ribbit Capital, TLV Partners, Zeev Ventures, Munich RE Ventures, Markel, Nationwide, American Express, and others.

Next has also partnered with insurers on products. It offers a Munich Re product targeting commercial photographers and tailored coverage for personal trainers developed with Markel.

The exact nature of Next’s relationships with these and other insurers going forward is not entirely clear. Goldstein said only that relations with Markel and Munich Re are “very strong, and as a carrier, we will continue to work closely with them.”

Goldstein said Next plans to expand its offerings to serve general contractors, roofers, beauty professionals and others, as well as enter new lines of business and roll out on-demand insurance and an improved claims management process.


Wells Media’s Carrier Management recently published a series of articles looking at the financial results of insurtech carriers by Matteo Carbone and Adrian Jones:

Dispatches From Insurtech Survival Island: Five Takeaways From Statutory Financials

  • In Part 1, the authors presented overall loss ratio, expense ratio and combined ratio results from statutory filings of the three insurers.
  • In Part 2, they broke down the startups’ expense spends and discussed the impacts of insurtech underwriting on the books of their reinsurers.
  • In Part 3, they offer conclusions about winning strategies of startup insurers


Topics Carriers InsurTech Tech Insurance Wholesale

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • May 24, 2018 at 2:51 pm
    Agent says:
    These stories all read the same about start ups, etc. Not sure the customer needs a "holistic" experience in purchasing insurance. Sounds a bit too word parsing to me.
  • May 24, 2018 at 1:33 pm
    Regis Coustillac says:
    I'm not sure you get $48 million in venture capital if you don't use the word "InsureTech".
  • May 24, 2018 at 1:25 pm
    Barry Rabkin says:
    Next is, and should be written about now, as an insurance carrier. Period! Next is not, and never was, an “InsurTech” because there is no such entity ... there is no legal... read more

Add a CommentSee All Comments (3)Add a Comment

Your email address will not be published. Required fields are marked *


More News
More News Features