By Stewart Pond, Principal at Cota Capital
We’re thrilled to share the news that Cota Capital led a $10 million Series A round in Layr, an insurance platform purpose-built to service small business insurance at scale. We’re excited to be joined by the K Funds, as well as existing investors HSCM Ventures, Sandbox Insurtech Ventures, and Flyover Capital.
Insurance is one of the oldest industries in the world and one of the largest contributors to GDP in the United States. Technology has driven disruption and transformation in many industries over the last few decades, yet insurance remains a late adopter across many dimensions. The process and platforms used to distribute, underwrite, and service customers rely on outdated tools and methods. Despite a slower pace of innovation and adoption, we believe there is significant market opportunity as pieces of the insurance value chain are upgraded or replaced.
Over the last few years, our conversations with insurance veterans continue to highlight that small business insurance remains one of the most underserved and attractive opportunities with over $110B in annual insurance premiums. Though, small business insurance has historically been a challenging segment of the market to acquire and service profitably.
The vast majority of insurance carriers rely on a large, fragmented network of 40,000 independent insurance brokerages to distribute insurance products and provide advice to their customers. According to the Independent Agents and Brokers of America, nearly 62% of property and casualty insurance is placed via independent agents in the United States. Within the commercial business segment, 88% is distributed via agents. Agents remain a lifeblood of the insurance industry yet are plagued with technology systems that don’t integrate well and find it difficult to scale due to the challenges of attracting and retaining licensed account management staff.
The founder and CEO of Layr, Phillip Naples, experienced many of these challenges firsthand as a longtime insurance producer of commercial insurance across several large regional agencies. He recognized the opportunity to leverage his insights to automate complex, manual workflows into a cohesive platform for agencies. Layr takes these challenges head-on, helping brokers to serve up to 6 times more small business clients, and aiming to drive a step change in profitability. Layr’s platform also optimizes the insurance experience for small business owners, providing a best-in-class experience for business owners to handle ongoing insurance requests.
In our discussions with insurance brokers, it was clear that Layr’s value proposition is resonating, and they are solving a key pain point in the small business segment. By aligning profit incentives alongside the broker, Layr has witnessed strong growth over the last two years and is well-positioned to expand its relationships across the broker community. Ten of the top 100 privately held agencies currently work with Layr, and we’re excited to partner with the company through its next phase of growth. We believe that Layr has the talent and expertise to build a category-defining platform for the small business insurance ecosystem and expand into broader coverage over time.