Fintech entrepreneurs often promise that their innovations and technologies will open access to vital financial services for those previously excluded. But this promise is not just about giving more people in developing countries access to financial services, it is just as important. Fintech can also open up markets in advanced economies.
For example, UK insurance technology company Peachy, which claims it can help more people get private health insurance. In the UK, the high cost of this type of coverage has put it out of reach for most people in recent years, but Peachey believes he can change that trend.
“Traditional health insurance products have some serious structural issues,” said Amit Patel, founder and CEO of Peachy, who was a former NHS physician who also held institutional positions at industry giant Bupa. "It's complex, inaccessible, and stuck in the analog world."
This is a common complaint. Major health insurers typically target their products to older, more affluent customers, and offer policies that cover a wide range of conditions and favorable rates. Costs can be reduced by limiting insurance coverage and higher deductibles to specific hospitals or with specific consultants, but flexibility is limited.
In contrast, health insurance based on the Peachy app is designed for more requests. Clients have more choices about what health conditions and treatments they want to secure, and how and where they can be diagnosed and treated if they need to file a claim.
The app provides a higher level of visibility, Patel points out, which is important in an industry often criticized for its lack of transparency. “You can use our app to learn more about benefits and limitations, check coverage, apply and contact your nearest healthcare provider,” he explains.
Perhaps the biggest difference is the cost. Individual costs will vary greatly depending on the capabilities of the policy holder and current health status. But Patel says the final cost of basic cover from Bupa in his case is around £45 a month; Meanwhile, Peachey quoted him £12.50.
The comparison is not entirely accurate. Even key Bupa products are packaged and offer ample coverage, while Peachy's customizable design means Patel can remove insurance items you don't need. This is one of the reasons for the lower costs.
Picci argues, once again, that this is exactly what we need. "It's an insurance product that provides just the coverage you really need," Patel said. "That's why it's so affordable - you don't pay for features you don't need."
This is fine in theory, but it raises an important question. When it comes to health issues, do people really know what they need from health insurance? The danger is that policyholders forgo some elements of Peachy's insurance coverage to cut costs, only to find out later that they made the wrong decision.
This is a valid point to make, says Patel, but that Peachy will provide as much information and guidance as possible to help customers make the right decision. "We think part of the problem with the health insurance market is that people don't always understand what they're buying, so we want to do something about that."
No doubt, the organizers are pleased with Beachy's approach. The company developed its application within the “Regulatory Protection Environment” governed by the Financial Conduct Authority, which allows fintechs to offer new products and services up to a certain time without seeking full regulatory approval.
There is also the argument that it is a timely product. The NHS is struggling to deal with delays in treatment caused by the Covid-19 pandemic as UK public finances are strained and lack the resources they need.
"Rich people already have the privilege to choose whether they get treatment from the NHS or private providers, so we're trying to give more people that choice," adds Patel.
One area where this could be particularly useful is mental health, as the NHS struggles to keep up with the sharp increase in demand in the wake of the pandemic. “People are becoming more aware of their mental health and well-being, but getting help can be very difficult,” Patel said.
He hopes that this business model will find a response among a wide range of potential policyholders, but especially among representatives of the younger generation, who previously thought private health insurance was out of reach. According to Patel, these generations are becoming more health conscious.
Picci must now turn theory into reality. Sandbox's regulation currently limits the number of customers they can serve, but the company is preparing to market more broadly. He has funding for the next 12-18 months as he pursues this imperative and further develops his ministry.
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