American Express Co (Amex) has invested in Next Insurance, a Palo Alto-based technology start-up that sells customized insurance for small businesses online and raised $29 million in May from investors like Munich Re
’s HSB Ventures, as Silicon Valley companies aim to shake up the insurance industry.
Next Insurance is seeking to update the way its 5,000 small business customers access insurance plans in what has become what it sees as an antiquated insurance sector, Reuters reported.
Next Insurance added in a report on The Street website, that Amex’s venture capital arm has joined its investor group, and it will utilize the new cash injection, which brings the investment round to $35 million, to increase the products it offers and target new business sectors.
In addition, it is in early discussions with American Express on a potential partnership, considering Amex’s large customer base of US businesses, Sofya Pogreb, chief operating officer, Next Insurance said in an interview.
Next Insurance, which was established last year, harvests and studies data to sell customized insurance to small business owners whom large insurers have potentially overlooked previously, including personal trainers, photographers and contractors.
It is part of the so-called “insurtech” start-ups, a growing group of young companies that are aiming to modernize the insurance sector through digital technologies, to improve customized underwriting decisions, and provide cheaper products.
A latest report by Willis Towers Watson
Plc (WLTW.O) and CB Insights states that small business insurance is one of the most promising fields for young technology companies, and estimates that 25% of the USA’s small business premiums could by underwritten digitally three years from now, as published by Reuters
Although it aids in creating the policies and sells the insurance, Next Insurance relies on large insurers as partners for underwriting and for some regulatory requirements. For example, its photographers’ insurance is offered with Munich Re
Next Insurance has 5,000 customers and has passed $1 million in total underwritten premium, Pogreb said.
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