The incentives that drive insurance companies are grossly misaligned with the best interest of their customers.
Insurance companies spend massive amounts of money to collect and hold massive amounts of money to pay for something that might never happen. Wouldn’t it be great if we had a system that only paid for things that actually did happen?
Let’s take a quick look at how the Eusoh platform works.
- A group of 20 people have individual contracts with each other to share an uncertain future expense. That’s 380 contracts in all.
- The monthly platform fee is $10.
- By contract, each member of the group maintains a deposit account of $40. There are stop-losses built into the system that guarantees that their monthly cost will never exceed $40.
- In November; Jane submits $50 of expenses, John submits $25 and the remaining members submit -0-.
- Each member contributes $3.75 for the losses. Distributions are made to Jane and John for their losses. The monthly fee is deducted, and drafts are made from member bank accounts or credit cards to replenish their deposit accounts to the determined level.
Now, expand the concept to 10,000 people. All have individual contracts to share some future uncertain cost. Nothing wrong with that except you’re dealing with millions of contracts and massive transfers and reconciliations of relatively small amounts of funds. It’s only recently that technology has evolved to the point of handling a challenge like this and Eusoh has harnessed that technology.
The resultant technology creates significant savings, transparency and aligned incentives. If you’ve heard of Eusoh, you see Pet care is likely what you're aware of. As we studied the concept, we realized that the Eusoh model could be applied to an unlimited number of what the insurance industry refers to as “short-term risks.” Rather than tackle human healthcare head-on, we decided to beta another segment.
- We wanted something that mirrored human health but flew under the radar. Nobody is going to get real upset if we disrupt the pet insurance industry.
- Pet care serves as a proof of concept.
- There’s room for market penetration. Only 2% of US pet owners have insurance vs. 30-40% in some European countries.
- We found that there’s potential to make good money in the pet sector while we’re gearing up for the big game of human healthcare.
I want to spend a little time telling you how we’ve spent our capital to date:
- The idea is worthless if it’s not legal, so we engaged a top law firm and worked with insurance regulators across the country to develop a white paper to prove that Eusoh meets regulatory requirements. A congressman, whose name you would recognize, heard about Eusoh and invited us to Washington because he wanted to learn more about it. He was very knowledgeable about healthcare and asked all the right questions. Evidently, we had all the right answers because, at the end of our meeting he said, “I’m in. You’ve covered all the regulatory issues. This is something that I can support.”
- Next, we built the product:
- We have an end-to-end platform that handles the payments, pricing and money transfers on an on-going basis.
- Perhaps more important, we have armed our members with a comprehensive price list of services. I’m only slightly embarrassed to admit that It was through the Eusoh platform that I learned I was paying 4X’s more than I should for my dog’s monthly heart guard medication.
- We have mitigated the legal risks
- And removed many of the administrative layers of traditional insurance.
It has been an interesting trip.
- Actuarial studies by two of the largest reinsurance companies in the world indicate that our model will save the average healthcare consumer >50% a year on insurance premiums, deductibles, and other out-of-pocket costs.
- We have been live in the pet care segment for over a year. Our real results indicate that our members are saving 80% vs. traditional pet insurance.
- We have an LOI with a large online provider of pet products that wants to use the Eusoh platform on a white-label basis to market their own pet care products. The launch is set for the 1st quarter of 2020.
- We have an RFP from a national manager of multi-family properties for 400,000 units.
- The trip to DC was surreal.
Unlike insurance, most of Eusoh’s costs are fixed. That means that once we hit scale, additional revenue will carry a gross margin of 80%.
That’s Eusoh: Innovative, Disruptive, a better way.