Oscar Health Insurtech reinvents health insurance (and is worth $3.2 billion)

This insurtech unicorn in the U.S. is overhauling a health system that doesn’t hold water, while innovating the health policy. It has collected staggering figures from venture capital, although it has only recently emerged from the “nothing in the bank”. Its pillars: technology and customer centricity

Published on 14 Apr 2019

Donatella Cambosu


Among its most important investors there is Alphabet, even CapitalG and Verily (its holding companies); but even many other leading names of overseas venture capital, such as Khosla Ventures, Fidelity Investments, General Catalyst, Founders Found. Since Mario Schlosser (now CEO), Kevin Nazemi (who spun out of the company), and Joshua Kushner, brother of Trump’s son-in-law Jared Kushner, founded the company in 2012, they have managed to raise as much as $1.3 billion in capital according to calculations from Crunchbase, one of the world’s most successful insurance startups. 

What exactly does Oscar Health do? 

Since its inception in New York, its mission has been to exploit the new market opportunity for the purchase of health insurance created by the Affordable Care Act (Obamacare). In the first two years, focusing on the New York and New Jersey area only, it has reached 40,000 customers and 200 million in annual turnover: its model has proved its worth, attracting new investors and allowing the company to expand. 

Oscar Health is a model of “textbook insurtech”: the technological component is the cornerstone that allows a new business model and customer-centric service. 

Leveraging its own technology, it simplifies the approach to insurance with very simple plans, it leverages the ease of use of the website, the attention to the person and his health. The image it is going to rely on (as its name suggests) is that of the family doctor, the communication is cool, the offer clear: free checkups, tele-medical examination, specialized advice, very “friendly” mobile application for quick advice and medicine research, 24/7 medical support, selection of reference hospitals. In short, the feeling it offers the customer is to have someone to really take care of them, a crucial customer experience when dealing with health. 

The idea for this startup was born from a need personally experienced by the founder and CEO Mario Schlosser, which is told on the company’s website. 

His story just happens to start in a hospital room. In 2012, Oscar´s CEO, Mario Schlosser, and his wife had their first pregnancy in New York. Faced with a labyrinth of insurance jargon and the practical impossibility of identifying the best midwife, their first significant experience with the health care system has put them in trouble as to how to orient or identify the people to turn to. 

Mario’s friend, Josh Kushner, had also recently had a frustrating experience for what should have been a routine treatment for an injury. Mario and Josh knew that their experiences showed a wider problem in healthcare: consumers are totally powerless. That spring they founded Oscar Health. 

Since then, Oscar Health has focused on being a patient-centered health insurance company, able to involve and guide patients to the right healthcare. 

It currently has a multidisciplinary team of about 700 people and has about 250,000 clients including individuals and companies. 

In recent years it has faced many challenges, including the abolition of ObamaCare; however, the insurance and health sectors are very hard for the newcomers to deal with. This meant for the company “nothing in the bank” until 2017, when it stated, reports Cnbc, to have reached the “profitability of the gross margin”, which means that the company had generated more money from premiums than those spent on medical coverage for its clients. 

In the annual report (2018) published on their website, Oscar highlights its progress and stresses how its service model is possible thanks to technology: a not trivial technology, not the result of integration of components already on the market and perhaps used by other companies, but a technology platform that the company defines (with a terminology typical of the IT world) ‘full stack’ or rather completely developed from scratch by the company. 

At Oscar, we find that healthcare is too compromised to be fixed simply by reconfiguring existing technologies or working with the same suppliers used by other insurers. That’s why we built our technology system from scratch, to allow us to own all our data and tools so that we can work steadily to improve the insurance experience without being slowed down by legacy systems. This approach clearly differentiates us from our competitors. It is also what has allowed us to attract more than $1.2 billion in total investment, including $375 million from Alphabet in 2018. This capital will allow us to invest in supporting more customers by expanding into more markets, entering new product lines such as Medicare Advantage and focusing on applications of our technology that can further reduce the cost of service.” 

An approach that investors liked and that allows to offer a new customer experience that ultimately leads to digital health. Among Oscar’s future aims there is the strengthening of telemedicine: currently it has launched a service called “Doctor on Call”, a virtual assistance system always available free of charge, 24/7, always improved to deal with increasingly complex medical cases. 

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Donatella Cambosu

Scrive di tecnologie, startup e innovazione da oltre 15 anni. Dal 2015 collabora con il Gruppo Digital360, in particolare con le testate Startupbusiness, University2Business, EconomyUp. Collabora con InsuranceUp sin dal lancio del portale avvenuto nel 2015 e ha maturato un'ampia esperienza in ambito insurtech.

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