Alphabet’s life science subsidiary Verily is jumping into the health insurance game with the launch of its new venture Coefficient Insurance Company.
The tech-enabled payer will be backed by Swiss Re Corporate Solutions, which specializes in data-driven risk assessments.
Coefficient, which is categorized as a Verily subsidiary, is targeted at self-funded employers and is pitched as stop-loss insurance. It will combine Verily’s hardware, software and data science and Swiss Re Corporate’s distribution model.
WHY IT MATTERS
Silicon Valley tech giants have often been viewed as potential disruptors in the healthcare space.
Meanwhile, the health insurance market has often been targeted as a facet of healthcare that needs to be reformed, specifically for its costs. There is also a lot of money poured into the space. In fact, the global health insurance market is expected to reach a value of $1.5 trillion by 2026, according to a market report by Acumen Research and Consulting.
The new subsidiary is pitched as a way to decrease healthcare costs and help self-funded employers control expenses.
"Employers have been facing rising and increasingly unpredictable healthcare costs for years," Andy Conrad, CEO, Verily, said in a statement. "Coefficient is aimed at reducing blind spots and providing greater cost control mechanisms for self-funded employers, and we expect that partnering with Swiss Re Corporate Solutions will help us to better develop and distribute our precision risk solution to the employer stop-loss market. Over time, we look forward to integrating Coefficient with Verily’s employer health solutions, including mobile health devices and innovative care management programs, in order to align payment models with better health outcomes."
THE LARGER TREND
This isn’t the first time Alphabet has looked at the insurance space. In 2018 it made a $375 million investment in digitally driven insurer Oscar Health.
Overall, tech-enabled health insurance companies have been sprouting up over the last decade, and raking in large funding rounds. For example, Bright Health, a Minneapolis, Minnesota-based payer startup, scored $635 million in Series D funding in 2019.
Also on the radar is Devoted, a startup that uses tech to blend health insurance and provider services, which scored $300 million in Series B funding. Perhaps one of the biggest players in the space is Clover Health, which according to numerous reports raised $500 million in funding in 2019.