One of the promises often made by fintech entrepreneurs is that their innovations and technologies will unlock vital financial services for those previously excluded from them. But this pledge is not just about giving more people in developing economies access to financial services, however important that may be. Fintech can also open up markets in mature economies.
Enter Peachy, the British insurer that claims it can help many more people get private health insurance. In the UK, the increasing cost of this cap in recent years has put it beyond the reach of the majority of people – but Peachy thinks it could reverse that trend.
“Traditional health insurance products carry some real structural issues,” says Amit Patel, founder and CEO of Peachy, who previously worked as a physician in the National Health Service, as well as in corporate roles at industry giant Bupa. “It’s complicated, it’s unaffordable, and it’s stuck in an analog world.”
It’s a common complaint. Leading health insurers typically target their products to older, more affluent customers, with policies that cover large numbers of conditions and are priced accordingly. Costs can be reduced through higher overruns and limited coverage for treatment at certain hospitals or with certain consultants, but flexibility tends to be limited.
By contrast, health insurance based on the Peachy app is designed to be more detailed. Customers get more choices about what health conditions and treatments they want to insure, as well as about how and where they want diagnosis and treatment in the event they need to file a claim.
Patel points out that the app offers much greater levels of visibility, which is important in an industry often criticized for its opacity. “You can use our app to learn more about benefits and limits, check coverage, file a claim and search and contact healthcare professionals near you,” he explains.
Perhaps the biggest point of differentiation is the cost. Individual prices will vary greatly, depending on the options the policyholders choose and the current state of their health. But Patel says that in his case, his latest Bubba quote for a basic level of coverage came in at around £45 a month; Meanwhile, Peachy quotes him £12.50.
The comparison is not entirely fair. Even basic Bupa products are bundled, providing a wide range of coverage, while Peachy’s configurable model means Patel can opt out of insurance items he feels he doesn’t need. This is one of the reasons why the cost is so much lower.
However, that is exactly the point, Beachy argues. “This is an insurance product that provides just the coverage you really need,” says Patel. “That’s why it’s so affordable – you don’t pay for unnecessary benefits.”
This is fine in theory, but it begs an important question. When it comes to medical issues, do people really know what they need from health insurance? The risk is that policyholders choose not to share some elements of coverage with Peachy in order to keep costs low – only to find out later that they made the wrong decision.
It’s a valid point, says Patel, but Peachy will provide as much information and guidance as possible to help customers make the right choices. “We think part of the problem in the health insurance market is that people don’t always understand what they’re buying, so we’re keen to do something about it.”
The organizers are certainly comfortable with Peachy’s approach. The company developed its application within the “Regulatory Protection Environment” operated by the Financial Conduct Authority, which enables fintech companies to innovate new products and services up to a certain point without the need to obtain full regulatory approval.
There is also an argument that this is a timely product. The NHS is under pressure trying to catch up on the backlog that has built up during the COVID-19 pandemic at a time when UK public finances are stretched, depriving it of the resources it needs.
“Rich people already have the privilege to choose whether to seek treatment from the NHS or go to private providers, so we’re trying to give more people that choice,” adds Patel.
One area where this could be particularly beneficial is mental health, with the NHS finding it particularly difficult to keep pace with demand, which has increased dramatically in the wake of the pandemic. Patel notes that “people are becoming more aware of their mental health and well-being, but getting help can be very difficult.”
It’s a business model that he hopes will resonate with a wide range of potential policyholders, but especially with younger generations who previously considered private health insurance out of their reach. Patel argues that these generations are also becoming more health conscious.
Beachy now has to turn theory into reality. The sandbox arrangement has so far limited the number of customers it can handle, but the company is preparing to market more widely. It has funding in place for the next 12 to 18 months as it seeks to meet this necessity and develop its services further.