Entry of the so-called tech giants into the insurance and reinsurance market has always been a hot topic and today it’s been announced that a Google unit is entering the employer stop-loss insurance space with the backing and support of reinsurance giant Swiss Re.
Coefficient Insurance Company is a newly formed subsidiary of Verily, a life sciences and health focused company owned by Alphabet, the holding company for Google and its many units.
Coefficient Insurance is being backed by Swiss Re Corporate Solutions, the commercial insurance unit of the Swiss Re Group, and aims to bring together innovative health technology solutions with novel insurance and payment models.
Swiss Re’s interest here is seemingly in developing a key partnership, as its Corporate Solutions division is set to make a minority investment in Coefficient, subject to closing conditions and regulatory approvals.
As a result, Ivan Gonzalez, CEO North America, Swiss Re Corporate Solutions, is expected to join the Coefficient Board of Directors upon closing.
This partnership and investment positions reinsurance firm Swiss Re at the heart of an initiative working with one of the biggest tech firms in the world to deliver better employers stop-loss coverage, through the use of data, life science expertise, as well as Swiss Re’s own distribution and depth of capacity.
The announcement says that new insurer Coefficient will make use of Alphabet’s life science specialist company Verily’s strengths, integrating hardware, software and data science, alongside Swiss Re Corporate Solutions’ risk knowledge, distribution capabilities and reputation in the employer stop-loss market.
Employer stop-loss coverage is part of the commercial insurance market where self-funded employers seek protection against unexpected and large employee health benefit claims, with losses capped at a certain level and employers reimbursed for claims above a pre-determined amount.
Coefficient has developed an analytics-based underwriting engine that is expected to help identify unexpected areas of cost volatility, and cover those exposures with a more dynamic and precise insurance product.
It’s designed to provide self-funded employers with more predictable benefit plan protection as a result, but of course this is also beneficial for insurance and reinsurance companies, as the data and science behind it should also help to make coverage more accurately priced and losses more predictable.
Coefficient plans to integrate Verily’s product suite, which features a range of health devices and tech-driven interventions for workers and dependents, into what it terms its “precision risk solution”, as it looks to improve health outcomes and control cost.
Again, that’s a benefit for someone like a Swiss Re, as it can help make claims more predictable and help the firm make more productive and effective use of its capacity as well.
What’s interesting about this deal for us is the bringing together of one of the largest underwriters of insurance and reinsurance related risks in the world, with one of the largest tech giants.
You have Swiss Re’s capital and capacity related expertise, underwriting knowledge and specialist insurance or reinsurance capabilities, alongside a company with significant depth to its pockets, ability in tech-terms to better understand risks, make use of real-time sensor technologies from its life science products and furnish underwriters with enhanced data for decision-making.
That’s not to mention reach and distribution…
Verily says Swiss Re will help it with distribution, that’s assured. But the reach of Google itself, being embedded into so many of our lives, is perhaps the bigger deal here, long-term and especially if this partnership expands.
As we’ve explained numerous times, the application of advanced technology, data, tools like sensors, and other high-tech innovations, alongside customer friendly product design methodologies and efficient sources of reinsurance capital, are set to enable re/insurers to make better use of their balance-sheets.
Swiss Re is well on the way down this path on its own, just look at initiatives like its iptiQ product, that effectively white-labels its own balance-sheet and underwriting rules for third-parties to integrate re/insurance products into their customer flow.
But with this tie-up with a Google entity Swiss Re is perhaps demonstrating that no partner is too big, or no threat from a tech giant so big, that it shouldn’t be seen as a positive opportunity to gain additional data and expertise while you expand the reach of your balance-sheet even further.
The partnership also perhaps betrays some of Google’s motives for the insurance space, as it isn’t trying to go it alone, rather making use of one of the best companies in the marketplace to assist it in bringing its tech expertise to bear in creating better insurance market product offerings.
It makes a lot of sense for Google to embrace insurance in this way, with the support of partners that have decades of experience and reach into niche markets where its technology can likely make a big difference.
“Employers have been facing rising and increasingly unpredictable healthcare costs for years,” explained Andy Conrad, CEO, 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. 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.”
“Swiss Re Corporate Solutions has long prided itself for being a knowledge-based and data- driven insurer. Today, we’re building on that strong foundation by partnering with Alphabet’s Verily to use advanced technology and data analytics to innovate risk management in the employer stop-loss space,” added Andreas Berger, CEO, Swiss Re Corporate Solutions. “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.”