US SME insurtech Next Insurance is taking part in Amazon’s insurance accelerator as the tech giant looks to upgrade its insurance offering. Next will help Amazon provide its sellers with instant quotes directly within Amazon Seller Central. Next is the only insurer participating in this trial, which grants it access to an enormous potential customer base and could see it move from leading insurtech to a key player in the US SME insurance market.
GlobalData’s Smart Money Analytics database shows that Next Insurance has already raised $881m as of August 2021, making it a leading insurtech globally by this measure. It raised $250m in each of 2019, 2020, and 2021, while it had raised $131m prior to 2019.
However, this tie-up with Amazon could take the insurtech to the next level. Even with vast sums of funding, the SME insurance market is still a difficult one to break into. Incumbent players hold large market shares, while many businesses remain loyal to existing providers. They tend to renew automatically and do very little shopping around.
GlobalData’s 2020 UK SME Insurance Survey found that 49.3% of SMEs automatically renewed their employers’ liability policy (the most popular SME insurance policy). Furthermore, only 7.5% actually changed insurer at renewal. This highlights how difficult it can be for new players to crack this market. While this data is based on the UK market, SME insurance trends are similar in the US.
This opportunity will allow Next Insurance to sell general liability, professional liability, workers’ compensation, commercial auto, and tools and equipment coverage. The best aspect of the deal for Next is it allows the company to go where potential customers already are. Next will be able to sell to them at the point of sale, rather than having to focus on customer acquisition and marketing to new customers.