A promise often made by fintech entrepreneurs is that their innovation and technology will unlock essential financial services for those previously excluded from them. But that promise isn’t just about giving more people in emerging economies access to financial services, important though that is. Fintech can also open markets in mature economies.
Enter peachy, a UK insurtech provider that claims to be able to help many more people get private health insurance. In the UK, the rising cost of such coverage in recent years has put it out of most people’s reach for most people, but Peachy thinks it could reverse that trend.
“Traditional health insurance plans present some real structural problems,” said Amit Patel, the founder and CEO of Peachy, who previously worked as a physician with the National Health Service and in corporate positions at industry giant Bupa. “They are complex, priceless and trapped in an analog world.”
It is a common complaint. Leading health insurers typically target their products at older and more affluent customers, with policies that cover a wide range of conditions and are priced accordingly. It is possible to lower costs by increasing deductibles and limiting coverage to treatment in certain hospitals or with certain consultants, but flexibility is usually limited.
By contrast, Peachy’s app-based health insurance plan is designed to be much more customized. Customers will have much more choice about which conditions and treatments they want to insure for, as well as how and where they want diagnosis and treatment if they need to file a claim.
The app offers much more visibility, Patel points out, which is important in an industry often criticized for its opacity. “You can use our app to learn about benefits and limits, check coverage, make a claim, and find and contact healthcare professionals near you,” he explains.
Perhaps the biggest point of differentiation is cost. Individual quotes will vary wildly depending on the options policyholders choose and current health conditions. But Patel says in his case his most recent quote from Bupa for basic cover was around £45 a month; Peachy meanwhile quoted him £12.50.
The comparison is not entirely fair. Even Bupa’s core products are bundled and offer broad coverage, while Peachy’s configurable model means Patel can exclude elements of insurance that it deems unnecessary. That’s one of the reasons why the cost is so much lower.
Yet this is exactly the point, says Peachy. “This is an insurance product that provides only the coverage you really need,” Patel says. “That’s why it’s cheaper – you don’t pay for unnecessary benefits.”
Peachy founders Amit Patel, Darren Bex and Dan Parker
That’s fine in theory, but it raises an important question. When it comes to medical matters, do people actually know what they need from health insurance? The danger is that policyholders will turn down certain elements of coverage at Peachy to keep costs down – only to find out later that they made the wrong decision.
It’s a valid point, Patel says, 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’d like to do something about that.”
Supervisors are certainly comfortable with Peachy’s approach. The company has developed its app in the “regulatory sandbox” operated by the Financial Conduct Authority, which allows fintechs to innovate new products and services to some extent without seeking full regulatory approval.
There is also the argument that this is a product that comes at just the right time. The NHS is cracking under the pressure of catching up with the treatment backlogs built up during the Covid-19 pandemic at a time when the UK’s public finances are under strain, depriving it of the resources it needs.
“Wealthier people already have the privilege of choosing whether to seek treatment from the NHS or go to private providers, so we are trying to give more people that choice,” adds Patel.
One area where that could be particularly helpful is mental health, where the NHS is finding it particularly difficult to keep up with demand, which has increased dramatically in the wake of the pandemic. “People are becoming much more aware of their mental health and well-being, but getting help can be very difficult,” notes Patel.
It’s a business model he hopes will resonate with a wide range of potential policyholders, but especially younger generations who have previously considered private health insurance out of their reach. These generations have also become more health-conscious, Patel says.
Peachy now has to turn theory into reality. The sandbox arrangement has so far limited the number of customers it can take on, but the company is preparing to commercialize more widely. It has funding for the next 12 to 18 months to meet that requirement and further develop its service.
