German insurance giant ERGO is expanding into the U.S. after acquiring Next Insurance.

The $2.6 billion deal, announced in a news release Friday (March 21), will allow ERGO — owned by Munich Re — to target the small business community in the U.S., comprising 30 million companies.

“However, the insurance penetration among this type of companies remains relatively low as 75% of U.S. small businesses are considered underinsured,” the release said. “The total addressable market is highly fragmented and estimated at around $175 billion, offering significant growth potential.”

Founded in 2016 and based in Palo Alto, California, Next provides property and casualty insurance with a focus on small businesses, with offerings including general liability and workers compensation coverage. The release noted that the company has seen “significant growth” in the last eight years and generated a top line of $548 million in 2024.

“This transaction will propel us forward, allowing us to scale our technology-driven approach and empower even more small business owners with innovative insurance solutions,” said Guy Goldstein, Next’s CEO.

“With the strength and expertise of ERGO and Munich Re and their well-recognized re/insurance know-how, we are poised to lead the charge in reimagining small business insurance in the USA.”

In other insurance news, PYMNTS spoke recently with One Inc. Chief Revenue Officer Kevin Ostrander who said payments within that industry can be inefficient and often paper-based.

Still, the sector has been undertaking what he deemed “a massive digital transformation over the last 20 years” that promises to accelerate workflows and payments.

“That transformation was initially focused on core systems, where carriers began to move off their legacy systems, which housed hundreds of applications that governed and ran insurance operations, from billing to claims,” PYMNTS wrote. 

Carriers have been working to streamline a range of processes and fuel an optimized customer experience, Ostrander told PYMNTS.

As for the payments, “when you think generally about payments overall, the concept of accepting a payment or pushing a payment isn’t really complicated,” he added. 

The complications come from getting to the point where insurers and their customers can pay each other how, when and where they want to be paid.

“Paper is still dominant within the insurance industry, both on the inbound premium side as well as on the disbursement side,” Ostrander said.