One 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 is not just about giving more people in developing economies access to financial services, important though that is. Fintech can also open up markets in mature economies.
Enter Peachy, a UK insurtech provider that claims it can help far greater numbers of people secure private health insurance. In the UK, the rising cost of such cover has put it out of reach for the majority of people in recent years – but Peachy thinks it could reverse that trend.
“Traditional health insurance products carry some real structural problems,” says Amit Patel, the founder and chief executive of Peachy, who previously worked as a doctor in the National Health Service, as well as in corporate roles at industry giant Bupa. “They are complex, unaffordable and stuck in an analog world.”
This is a common complaint. Leading health insurers typically target their products at older and more affluent customers, with policies covering large numbers of conditions and priced accordingly. It is possible to reduce costs through higher co-payments and limiting coverage to treatment in certain hospitals or with certain consultants, but flexibility tends to be limited.
In contrast, Peachy’s app-based health insurance is designed to be much more tailored. Customers get much more choice about which health conditions and treatments they want to insure, as well as how and where they want diagnosis and treatment if they have to make a claim.
The app offers much greater levels of visibility, Patel points out, which is important in an industry often criticized for its lack of transparency. “You can use our app to find out more about benefits and limits, check coverage, make a claim, and search for and contact healthcare professionals near you,” he explains.
Perhaps the biggest point of differentiation is on cost. Individual quotes will vary greatly depending on the options policyholders choose and the current state of their health. But Patel says in his case his most recent quote from Bupa for a basic level of cover came in at around £45 a month; Meanwhile, Peachy quoted him £12.50.
The comparison is not entirely fair. Even Bupa’s basic products are bundled, offering a wide range of cover, while Peachy’s configurable model means Patel can refuse elements of insurance he feels he doesn’t need. This is one reason why the cost is so much lower.
Yet that’s exactly the point, Peachy argues. “It’s an insurance product that only provides the coverage you actually need,” says Patel. “That’s why it’s more affordable – you’re not paying for unnecessary benefits.”
This is fine in theory, but it does ask an important question. When it comes to medical matters, do people really know what they need from health insurance? The danger is that policyholders withdraw certain elements of cover from Peachy to keep costs down – only to discover 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’re keen to do something about that.”
Certainly, regulators are comfortable with Peachy’s approach. The company developed its app within the “regulatory sandbox” operated by the Financial Conduct Authority, which allows fintechs to innovate new products and services up to a point without seeking full-scale 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 strain of trying to catch up with treatment backlogs that have built up during the Covid-19 pandemic at a time when the UK’s public finances are being stretched, 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’re trying to give more people that choice,” adds Patel.
One area where this could be particularly useful 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,” Patel points out.
It’s a business model he hopes will appeal to a wide range of potential policyholders, but especially with younger generations who previously considered private health insurance out of their reach. These generations have also become more health conscious, argues Patel.
Peachy must now 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 in place for the next 12 to 18 months as it seeks to meet that need and further develop its service.