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Market analysis on Oscar as an insurtech startup. Unique advantages and approaches to solve problems are placed in the industry landscape. Recommendation is to develop a holistic smart app.

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insurtechmarketing-automationapplicationhealth-insurancemolecular-modeling

Oscar for You

A Fintech Case Study

An interactive experience on health insurance

Vision: "changing the user interface of health insurance"

“redesign[ing] insurance to be geared toward the user experience.”

PPT Link

Overview and Origin

Oscar was incorporated in 2012, headquartered in New York City. Founders of the company are three classmates at Harvard Business School: Mario Schlosser, Josh Kushner, Kevin Nazemi. It launched insurance selling in 2014, the same year as individual mandate and Affordable Care Act exchange went into effect. Oscar is named after one of its co-founders, Kushner's great-grandfather.

Oscar's official website tells a story on the patient-unfriendly process that Schlosser went through with his wife during her pregnancy. Similarly, another co-founder, Kushner, suffered from health insurance services provided on his sprained ankle according to Wikipedia.

The company was founded through a series of investment rounds for a total funding of 1.3 billion by 2019. More specifically, from 2014 to 2016, Oscar raised from:

  • Series A for $30 million through Peter Thiel's Founders Fund
  • Series B for $145 million from Formation 8, Horizons Ventures, Wellington Management Company, Goldman Sachs, etc.
    • Google Ventures in September
  • Series C for $400 million via Fidelity Investments

Some of its other investors include Thrive Capital, General Catalyst Partners, Khosla Ventures, CapitalG.

Business Activities:

According to "Data: Gold or kryptonite" by IBM, 56% of the surveyed customers stated that they trusted their insurance providers while 44% expressed their unsatisfaction about the personal attention given to them. Insurance customers want quick digital access to answers to their questions.

From selection to claims, there are inefficiencies along process.

  • Mosaic processing and billing of health insurance on:
    • Copay and coinsurance
    • seeing a specialist
    • Claims process
    • Plan of best fit
    • "impersonal" health insurance call center
  • Related inefficiencies on insurance when seeing a doctor include:
    • transportation cost
    • wait time
    • paperwork
      • referrals for specialist visits
      • initial consultation at different institutions

Target clientele of Oscar are:

  • Individuals and families
    • including medicare
  • Small businesses
    • “SME Insurance Market Size to Expand USD 9800 Million globally by 2023.” openPR.

Oscar claims that it will experience major growth for the third consecutive year in 2020, providing coverage to 12 new markets in Arizona, California, Colorado, Florida, Georgia, Kansas/Missouri, Michigan, Ohio, Pennsylvania, Tennessee, Texas and Virginia, besides New Jersey and New York.

Oscar Health enrooled 16,000 subscribers in 2014. In one year, its subscribers grew two and a half folds. Approximately 50% of the subscribers reside in the state of New York as of 2016.

Besides heaving insurance regulation, Oscar is notable as an startup that scaled to $3.2 billion valuation as of 2019. It sustained through loss from 2015 through 2017.

Using Oscar's app, UI, speech and picure recognition enable customers to talk to a doctor 24/7. Geofencing and geo-locational data allows clients to choose PCP and specialists. Pricing algorithm are adopted to assess risks and set prices based on age, income, geography and coverage. Thanks to its network, no referrals are needed to see a specialist. Save the trip to local pharmacies to get prescriptions.

Based on Oscar Tech, Mario Schlosser posted on Jun 3, 2019 that it uses "EigenTrust Algorithm" to determine authenticity. In the article, he explained how the algorithm functioned to ensure proper music download originally.

Oscar unwraps multiple point of interaction with customers through its mobile app. A "revamped digital onboarding flow" is designed to set up imporved payment options. Digital ID card are made more convenient to access with shrinked wait time. Compatible with wearable tech devices, cash rewards are available for meeting daily steps tracking goals. Oscar connects with clients through emails. "Concierge Team" assignment are arranged for onboarding in connection with location, plan similarities and information collected from diginal health questionaires.

An interactive digital experience is provided through customized step-by-step task list that can be completed online.

  • Results:

    • 87% Oscar policyholders has an online account

    • 45% policyholders use digital tools to track steps, access bills, pay premium, research physicians, talk to PCP, etc.

      “2 months in: impressed w/ @OscarHealth. This is the future of healthcare. No more shrouded policies or terrible custsvc… I have a 24/7 on-call doc I can text/call for help/prescriptions. My concierge speaks English and is happy. I just made $12 for my steps.” - Anonymous Oscar Subscriber

    • Anatomy - UI/UX design based on Atomic Design: treating UI elements or components as atoms for scalability

      • provider data management
      • claims processing
      • web tools used by Concierge team

Landscape:

Oscar is in the Insurtech domain.

Major trends in the next 5 to 10 years include:

  • Risk management: Proactive prevention rather than reactive process
  • Customer retention: traditionally, 56% of customers were satisfied with their insurance provider for personal attention ("Data: Gold or kryptonite report" by IBM)
  • Blurring legacy industry boundaries - call for diversifiction
  • Collaboration with adjacent industries, e.g. partnership between Volkswagen and carsharing company Zipcar
  • Cost mutualization, e.g. AccessFintech
  • IBM - "customer insights, agile business models and operational excellence"
    • Advanced analytics solutions help insurance organizations ourperform competition by 76%

According to IBM studies, Insurtechs "cherry pick lucrative parts of the value chain" compared to legacy insurers.

  • Underlying capacity:
    • Mobile alerts
    • Electronic claims and cognitive processing
    • Proactive claims alert
    • Virtual assist
    • Proactive recommendations on product and real-time services
  • Technologies:
    • Streaming analytics for unstructured data
    • AI - visual and language
    • Robotic automation - deep learning
    • Blockchain
    • NPU - neural processing units

Other major companies in Health Insurtech domain include:

  • Aetna - in NYC

  • Policygenius - based in NYC, founded 2014

  • Clover - founded in 2014

  • Bright Health - founded in 2015

  • Fabric

  • Bestow

  • Getsurance

  • IBM Insurance, offering

    • Machine learning on unstructured customer experience data
    • Cloud Services
    • Robotic process automation
    • Security
    • Watson Expert Assist
    • Insurance platform
    • working with:

  • Amazon - recruiting insurane talents

There is a trend for interdisciplinary coverage to offer hollistic insurance experiences. Here are examples of Insurtech companies on ther insurance fields:

  • Groupama
    • transform "real-time, real-world driver data" via telematics
  • Amica
    • claims processing
  • Desjardins
    • inclement weather coverage
  • Generali and IBM services
    • cognitive workflow driven by AI
  • Roost Home Telematics
    • smart home technology to proactively manage damages and claims
  • Car2go, Daimler's
    • including insurance as part of car-sharing package price
  • Maltester and elderly care
    • equip homes with Internet of Things (IoT) sensors and AI to improve home safety for the elderly and potentially young families

Results

Oscar subscribers increased to 250,000 to date. Organized initial consultation under a proactive structure. Technology and customer service teams rounted 43% of members' first visits to doctors. Both customers and physicians would experience higher quality of clinic visits. 41% of members access web and mobile portals monthly. Virtual interactions with health care systems constitute 63%, reducing cost and time wasted on travel. Possibly bypass third-party processing and reduce carbon. Premium services are provided through partnership with more than 10 of the top US health systems and 3,500 physicians of 140 specialties.

Companies in Insurtech domain measures performance through subscribers, satisfaction surveys, product quality reviews. According to Oscar:

"Oscar's Net Promoter Score is three times as high as the average for health insurance comapnies."

14% of Oscar members enrolled from referrals from doctors, friends and families. In New York, about 1/3 subscribers are referred to Oscar this way.

Percentage of members using step tracking driven by discount incentive grew up to 28% in 2017, compared to 22% in 2016.

Recommendations

  • A more holistic smart device or app on smart phone can help with underwriting. It tracks daily activities for a specified period of time on excercises, driving, working, sleeping, heartbeat rhythms caused by mood changes, etc.
  • A more transparent sales app or extension for investors that builds on blockchain. Potential clients can run the premium estimation and sign contracts after information being verified.
  • A tool that matches physical conditions with prescriptions and connect with insurance coverages
  • A social media platform for auto-matching groups of users for self-insured virtual community based on unstructured data, realized by AI and maching learning.

A smart app on wearable devices including Apple iWatch and Fitbit would drive revenue because:

  • It "start small, scale quickly", especially with the step tracking discount offered by Oscar.
  • engages millenials and younger users, which in turn drives family plans
  • potential to pair up with home care agencies in care of the elderly
  • show value and gain support by developing prototypes and minimal viable product (MVP) pilots

This additional product or service utilize

  • text, picture and video recognition software for claims and regtech purposes
  • rebates on commercial line serivces search in case of a popping up need, e.g. transporting a treadmill to an apartment that need home insurance or other lines of insurance
  • search engine for healthy snack purchases so that the app can function as Rakuten ebates

The technologies are helpful because

  • They are customer-centered and providing one-on-one quick responses
  • Sales driven because some needs for coverage are seasonal if not impulsive
  • Besides analyzing unstructured operational data, machine learning and AI can furnish existing actuarial models though features of data clusters
  • Technology only add value with improved underlying models
  • Potential of capitalize on medicaid plans through providing data for regtech companies

References

About

Market analysis on Oscar as an insurtech startup. Unique advantages and approaches to solve problems are placed in the industry landscape. Recommendation is to develop a holistic smart app.

insurtechmarketing-automationapplicationhealth-insurancemolecular-modeling

License:Apache License 2.0