In interviews with engineering candidates, we are often asked about what kind of tech challenges they will get to work at Plum. With this post, we are highlighting some of the problems we are solving to fix employee health insurance & care.
But first, a primer on insurance.
It’s an inherent human nature to take risk. We all take small risks each day, e.g. when we choose to drive a bike or when we choose to fly, and now in COVID times by going to a workplace (where the probability of spread is more than staying at home). On the flip-side, it’s also human nature to protect against any losses from those risks. One way we do that is by sharing or pooling our risks.
History of risk pooling dates back to thousands of years, where farmers would come together to pool their harvest. They would choose to give up a higher yield in good years to mitigate a potentially lower yield in bad years. This idea of pooling risk is the fundamental concept behind insurance.
If you’re curious about how the insurance works, watch this talk by Angela Strange on the future of insurance, and it all starts with the history.
Let's move on to our challenges.
Challenge #1: Underwriting
Underwriting is how you price risk and there is a science behind this — known as actuarial science. It uses mathematical and statistical modeling to assess the risk, and then arrive at a pricing that is adequate (sufficient to cover the cost), equitable (sets the floor price), and not excessive (sets a ceiling price).
Each kind of insurance such as health, life, motor, fire, cyber, etc. have their own domain-specific underwriting model — some models are more complex than others, some models are deterministic (easier to reason) and some are stochastic (captures the real-world randomness & harder to reason).
Plum works closely with insurance partners on underwriting health insurance for groups such as corporates, communities, etc. where a pool of risk needs to be priced as compared to an individual. Check out this post from us where we explain the differences between individual and group health insurance.
Underwriting a group is fundamentally different from underwriting an individual. Here, along with the morbidity of the group, we need to assess a whole lot of demographic data points that determine the pricing & measures to prevent adverse selection.
Do you know which city in India has the highest cost to healthcare?
It’s Mumbai. Next costliest? Hyderabad.
These demographic indexes informs the underwriting engine to create plans with less or more restrictions. Should a plan should have a waiting period on pre-existing disease or maternity? What sub-limits could be imposed on a plan such as coverage amount, room rents etc.
With Plum, we are changing how the insurance quotes are solicited today i.e In excel sheets with back-and-forth revision on policy conditions & pricing.
Status quo of Insurance quotes in the industry
Plum’s pricing engine is real-time and allows unlimited customization to health plans. Our customers get instant pricing estimates. They can activate their health plans on the same day instead of weeks.
Health underwriting is a hard & challenging problem that uses ~100 variables creating more than 200,000 permutations of a health plan that a corporate can purchase.
Challenge #2: Simplification
At Plum, we have three principles of simplification:
- Access & Accessibility
Access & Accessibility
How can we make our platform and memberships easy to use for a diverse demography? We are building systems to allow our members & their families to login without passwords — Google Sign-in, OTP-based logins, magic links & more. In 2020, you shouldn’t be worried about remembering a password for yet another service.
Health insurance is absurdly complex with policy wording that can fill up to 20 pages with insurance jargon. We did a readability test on a policy wording document using Grammarly. On an average, a standard health insurance policy document has 10,000+ words with a reading time of 1 hr 15 mins, and a reading comprehension score so low that it should be difficult for most English speaking adults to even understand.
Here is the report (look at the whooping 45% rare words, jargons):
At Plum, we are working hard to simplify insurance and make our health plans understandable by even a 10-year old.
Insurance companies have a bad reputation in the market & some even think they are evil. It is because every claim denied is an opportunity to add to the profit. This misaligned incentive is why we are seeing disruptive insurance models such as Lemonade.
With Plum, we are bringing transparency to every touchpoint with our customers — purchase, manage & usage. We believe we can solve this by removing humans from the loop and bringing more visibility to our internal processes.
Plum members can plan treatments in concert with their health policies where we work with them to set the right expectation on out-of-pocket expenses vs insurance coverage.
Challenge #3: Automation
Insurance companies typically operate on thin margins where claims cost constitute about 70% of the total premium (this is considered to be good in the industry). That leaves about 30% of the premium to be used for acquiring & servicing customers — every penny saved here is a profit.
Traditionally both customer acquisition and servicing involve several human touchpoints in soliciting quotes, checking for frauds, approval of purchase & compliance procedures, and then servicing customers.
One of the leading insurance providers in India has 6000+ people in their servicing team processing excel sheets in the administration of ongoing policies and supporting claims.
At Plum, we believe in applying technology to the problem instead of throwing people at it. We are focussed on automation in the following areas:
Where we are reducing the buying process from 60-days to 60-seconds by removing the clunky paper-heavy process that requires half-a-dozen documents to be physically signed & stamped in order to book a group policy.
Where we have a self-service dashboard for HR teams to add or remove employees as they join or exit the organization. Employers can deposit additional premium to their insurance accounts or withdraw excessive premiums from insurance accounts, and track health-claims data in real-time.
Where our members can submit claims just by taking pictures of the hospital bills, discharge summaries & diagnostic reports. They can then track the status of these claims in real-time.
Come join us in building a truly online insurance platform that covers frontend (distribution) and backend (pricing, carrier, and compliances) — to offer customizable, digital, and immediate insurance offerings.
Challenge #4: Care
At Plum, we care about our members. We know our members need us in their toughest of times and we want to be there with them until they are back home & healthy. Here, bots & humans come together to provide the care that our members need. We are in the learning phase of what & how much to automate vs where to provide human support.
Our support is humane and our tone is compassionate.
Health & Wellness
We curate best-in-class health benefit providers in the market and bring them to our members covering health check-ups, doctor consultations, mental health, fitness & yoga, and dental care. We work with our health benefits partners to create new products for employee groups. In Plum, members get unified access to their comprehensive healthcare needs.
Plan a treatment
Our members start their healthcare journeys in Plum. They learn about their coverages, understand if a treatment is covered, and then get guidance on the usage. We continue to learn more about healthcare & set the right expectation with our members on the expenses — out-of-pocket vs insurance. We record their treatment journeys and make proactive checkpoints with them to make sure they don’t have to hassle.
Join us to set up a high-tech care delivery system to support our members with queries around coverage, first notice of loss, and healthcare claims.
Challenge #5: Integrations
We cannot exist in a silo, we have to work with multiple ecosystem partners including insurance companies, payment processors, payroll providers, HR information systems & health benefits providers. One of our core strengths is that we build integration rails with our partners that create end-to-end workflows.
Fraud checks, policy booking & payments
Our premium collections are high-value, low-volume transactions. These come with a high degree of compliance — digital signatories to bind insurance policy, e-KYC for corporate identification, GSTIN & payroll verification. We stop frauds at the gate & now building an industry-first digital booking & issuance system.
Automated on-boarding & payroll deductions
We are integrated with popular HRIS & payroll providers to automatically enlist and de-list employees when they join or exit a company. Our goal is to create a zero-administration dashboard for HR & finance teams.
We have to bridge the gap between modern infrastructure and legacy systems to build fail-safe processes.
Join Our Team
Plum is a modern health benefits company that understands the needs of a corporate and guides them to smart choices. We are working to improve health benefits by providing employers & employees with more flexibility, transparent pricing, and higher quality healthcare experience. We combine modern technology with robust processes to deliver unprecedented simplicity & efficiency.
We are growing fast & looking for people who are honest at their engineering craft, humble, and polyglots.