Verily Launches Tech-Focused Payer for Self-Funded Employers

Verily, Alphabet’s life sciences and healthcare subsidiary, and Swiss Re Corporate Solutions have announced that it will launch a payer for self-funded employers called Coefficient Insurance Company (Coefficient).

Stop-loss insurance reimburses self-funded employers for high cost employee claims over a certain threshold.

“Employers have been facing rising and increasingly unpredictable healthcare costs for years,” said Andy Conrad, chief executive officer of Verily.

“Coefficient is aimed at reducing blind spots and providing greater cost control mechanisms for self-funded employers, and we expect that partnering with Swiss Re Corporate Solutions will help us to better develop and distribute our precision risk solution to the employer stop-loss market.”

Verily is partnering with Swiss Re Group’s commercial insurance arm, Swiss Re Corporate Solutions, for this new venture. Swiss Re Corporate Solutions will not only provide financial backing but also knowledge about risk,  distribution, and it will boost the fledgling insurance company’s reputability.

The new payer will also benefit from Verily’s backing. The healthcare company offers technological advantages in software and data science as well as integrated hardware, the press release stated. The payer will implement precision risk solutions with the support of an analytics-based underwriting engine to better serve its self-funded employer customers.

The partnership emphasized these technology solutions along with advanced payment models as part of its overall vision for Coefficient’s health plans.

“Over time, we look forward to integrating Coefficient with Verily’s employer health solutions, including mobile health devices and innovative care management programs, in order to align payment models with better health outcomes,” Conrad said.

The companies did not reveal how much Swiss Re Corporate Solutions would be investing in Coefficient but indicated that it was a minority investment, dependent on successful regulatory approvals and agreed upon closing conditions. In addition to the investment, Swiss Re Corporate Solutions will have a seat on the payer’s Board of Directors.

“We look forward to working with Coefficient in delivering on our mission to address industry inefficiencies, provide an outstanding customer experience and advance corporate insurance together,” said Andreas Berger, chief executive officer of Swiss Re Corporate Solutions.

A little over a month earlier, another new health insurer came onto the scene: Walmart.

Walmart’s new payer arm, Walmart Insurance Services, LLC, surfaced quietly, unaccompanied by any formal announcement from the major retail company.

While the details are still largely veiled, Walmart has revealed that it will be launching Medicare products.

The move was not without precedent, as Walmart’s competitor CVS Health had already launched into health insurance with its acquisition of Aetna.

Similarly, Verily’s new venture in health insurance is not completely unexpected.

In 2018 and before, the company had considered submitting joint bids with payers, hired a former Horizon Blue Cross Blue Shield of New Jersey senior manager, and posted job listings for a “health plan executive,” according to CNBC.

A competitor that also emerged with an emphasis on technology is Oscar Health. The payer received $375 million in investments from Verily’s sister company, Google, back in 2018. Google’s investment went toward expanding the technologically-focused payer’s Medicare Advantage markets.

Most recently, Oscar Health and Cigna joined forces to offer a health plan that specifically targeted small businesses.

Since 2017, the payer has increased its footprint every year. For 2020, the payer planned to expand into 12 new markets including six new states. It also initiated a Medicare Advantage plan in New York and Houston.

The payer attributed its success in part to its technological foundation.

“Oscar’s expansion proves that our commitment to making health care easy — by developing seamless technology and providing personalized support — is working. I have never been prouder of the work Oscar is doing to positively impact our members' lives," Mario Schlosser, Oscar chief executive officer and co-founder, said in 2019.