The government may be shutdown as a result of the Affordable Care Act, but that isn’t stopping health-insurance exchanges from kicking into gear, or startups from capitalizing on them.
SimplyInsured has closed $750,000 to help small businesses navigate the changing landscape of costs, taxes, fines, and regulations surrounding health insurance.
“There are 400,000 health insurance brokers in the US who sell insurance the same way, via paper, phone, and fax,” said cofounder and CEO Vivek Shah to VentureBeat. “This is a trillion dollar industry that sells like it’s in the 1950’s. We can’t imagine a world where in 5 years, a small business will be purchasing insurance offline.”
The Y Combinator-backed company has built a number of online tools to help small businesses figure out which plans are right for them. Shah said that over 6 million small businesses currently purchase insurance offline, and SimplyInsured is the only group health insurance “parser” on the Internet.
Its website offers immediate quotes across all insurers, multi-carrier comparisons, and the ability to complete the application and administration process online.
SimplyInsured’s technology reads health insurance plans and models more than 100 different medical scenarios — from a simple doctor’s visit to getting hit by a bus — against the them to generate custom price estimates and recommendations. Its algorithm ranks each plan on premium vs. coverage provided. Once a client picks a plan, they can fill out the applications and access information.
Shah said that brokers and insurance companies produce complex plans that are difficult to understand. The Affordable Care Act elevates the possibilities for greater clarity and transparency when it comes to insurance, and will likely drive many brokers out of the market.
This creates opportunities for a low-cost online brokers, like SimplyInsured.
The startup’s goal is to simplify plans so “normal” people can understand them and reduce costs for businesses. The company claims its technology can save clients up to $1,000 per employee.
Now with the opening of the ACA exchanges, SimplyInsured enables people to create custom quotes for plans offered on the Covered California healthcare exchange.
Shah founded SimplyInsured with cofounder Bob Aspell, who was his housemate and classmate at MIT. Shah worked as a consultant in consulting firm McKinsey’s Healthcare practice working with health insurance clients and saw how difficult it was to answer simple questions.
“I built an Excel model to estimate costs and eliminate issues like deductibles, coinsurance, maximums, etc.,” he said. “My excel model became the basis of our website. It provides easy to compare costs for the most common health procedures, comparable across all health plans.”
SimplyInsured earns a recurring monthly commission for every group it signs up and its recurring revenue has grown by 500% in the last 6 months.
Investors include Y Combinator, Altair Capital, founders of NerdWallet Jake Gibson and Tim Chen, Waseem Daher, Jeff Arnold, Amee and Adil Chaudry, Sam Melamed, and Matt Huang.
VentureBeat’s VB Insight team is studying project management...
Chime in here, and we’ll share the results