By Sandra Perez
When you hear “major medical insurance,” you probably think of all the paperwork that needs to be done, how difficult it is to understand, and maybe even how expensive it is. So many better to avoid the subject, leaving aside the importance of having one.
This situation is more common than we might imagine in Latin America, where insurance penetration is generally around 3% of GDP, according to a report by the Swiss Re Institute, a percentage that is far below the world average (6.1%). Why is this happening in the region?
Simply, experts say that this happens because there is no culture of prevention and there is no government regulation in the countries that forces citizens to have one.
In addition, the ecosystem is changing, as are the people, so are their needs. For example, today, the millennials are interested in acquiring insurance, but they don’t want the policies that their parents had. They want those that only cover what they really need, say experts. That’s right, they’re looking for personalized insurance. And, about 60% of this population is also buying it digitally, says a study by Mango Life.
This is exactly the context in which the founders of Sofia, a health and technology startup, saw an opportunity to provide an insurance plan through an app, without paperwork or a deductible. “All-inclusive in one plan,” they mention on their website.
Pandemic gave Sofia a boost
Although Arturo Sanchez, Sofia’s CEO, Sebastian Jimenez, and Manuel Andere, its co-founders and technology product experts, had already been developing the platform for two years, their first services had to be launched last April due to the pandemic, Arturo Sanchez tells Hyper Noir.
As I mentioned before, everything is in constant metamorphosis. So, the arrival of the COVID-19 pandemic accentuated the health needs of the population and Sofia was there to provide a solution for remote medical consultations in Mexico, its country of origin, and where the company currently provides its services.
Sofia’s CEO remembers that at that time users of all ages used the service. He even comments that there were older people who appreciated having a remote consultation because this way they reduced the risk of contagion.
It is worth mentioning that the company had planned to reach a target between 25 and 35 years old with an income of around $10,000 and $20,000 Mexican pesos for each member of the household, but the fact that older people used the platform made them see another area of opportunity. Even during this period, around 4 thousand users used the video consultation service.
Sofia is not alone on the road
But it wasn’t until November 18th they were able to launch their business model based on a health plan and major medical expenses since that’s when the National Insurance and Finance Commission gave them regulatory authorization.
Arturo talks about how one of the company’s goals is to make health care more accessible. That is why they are looking to provide these services in an easy way, without a deductible, and in a digital way, which makes them simplify processes and therefore costs. “The use of technology makes many processes more efficient,” he says.
Today, about 90% of private health spending is made from each person’s pocket, but with Sofia that will reduce, since it covers up to 70% of everything covered by the general conditions of the insurance; therefore, it reduces that 70% in face-to-face consultations.
On the other hand, the maximum payment derived from the 30% corresponding to the members is $50 thousand Mexican pesos ($2 thousand dollars). And the insurance coverage is 1.5 million pesos ($75 thousand dollars), reinstated every year on the anniversary date.
The startup already has 10 thousand registered users in major medical expenses, 100 doctors in Mexico City, and in a startup will provide services in 70 areas of specialization.
Sofia is not alone in achieving its plans, since in March it had a seed capital round of 6.3 million dollars, bringing its total investment to over 25 million dollars. And in early November the company had the backing of a Series A investment round of 19 million dollars, led by Index Ventures, which allowed it to launch the Health Plan. Thus, to date, its investors include Kaszek Ventures, Ribbit Capital, Cavalry Ventures, and personal investors such as David Velez, founder, and CEO of Nubank.
With this support from its investors and with a strategy up its sleeve that includes providing a simple and improved navigation experience in the health system, Sofia seeks to break the traditional model of health and insurance services.
The population “must improve the way it takes care of its health since only 7% of the population has private health insurance and those who already spend on these services do so in a risky and unpredictable way,” says Arturo Sanchez, but with Sofia, this could begin to change today in Mexico and perhaps tomorrow in Latin America.