US insurtechs undertake layoffs

11 July 2022

Insurtechs in the US are reducing staff numbers, citing a worsening macroeconomic environment which is affecting access to capital and the financial strength of customers.

Texas-based life insurance insurtech Bestow laid off around 14% of its workforce – or 41 employees – in June, according to local media, pointing to “changing market conditions.”

California-based Next Insurance announced in a message to staff it is cutting its workforce of around 800 by 17%.

“It is my responsibility to adjust our priorities in light of the new reality of market conditions and to accelerate Next’s goals to become profitable,” CEO and co-founder Guy Goldstein said. “This is one of the hardest decisions I have made.”

He said there had been a “tremendous deterioration” in capital markets and market conditions were putting a strain on the economy and the small businesses Next serves. Management have consolidated functions and lowered operating costs, discretionary spending and marketing spend.

“The way we are going to play to win in 2022 and beyond is very different from 2021,” Mr Goldstein said, adding that in previous years the plan was to leverage available capital to invest and scale the business.

“Now, we need to shift to prioritise profitability,” he said. “Our expenses are too high for our current revenue and insurance capital requirements.”

Next backers include Munich Re Ventures and Alphabet’s private equity arm CapitalG. In March last year, it was valued at $US4 billion ($5.86 billion) after raising more than $US880 million ($1.29 billion) since it was founded in 2016.