Verily Life Sciences, the health care company owned by Alphabet, is getting into insurance, the company announced today. Verily is launching a new subsidiary for the effort called Coefficient Insurance Company, which will be backed by the commercial insurance unit of Swiss Re Group.
Coefficient plans to offer stop-loss insurance. The explanation for stop-loss is a little technical, but it boils down to this: Employers that pay for employee health claims out of pocket buy stop-loss insurance. Once they hit the predetermined point of money they pay for their employees’ health, the stop-loss insurance company pays the rest.
Insurance is something of a departure for Verily. A previous project from the company is Project Baseline, a massive medical study to better understand the human body. Project Baseline is also the banner Verily has used for its COVID-19 screening website, which President Donald Trump incorrectly said was backed by Google in March. Verily has also made a health-tracking smartwatch intended to be used for research studies.
But Verily CEO Andrew Conrad is reportedly divisive within the company and impulsive about what projects Verily takes on. And it’s been unclear how Verily would make money, despite its lofty goals. (Alphabet doesn’t typically break out Verily’s financials, but Alphabet’s Other Bets category, of which Verily is a part, had an operating loss of $1.1 billion last quarter.)
Insurance could be a more reliable source of income for Verily, as the company’s history in technology and health care could make the new Coefficient subsidiary an intriguing partner for insurers. For example, Coefficient claims its “analytics-based underwriting engine” will help employers better understand risk that they’re taking on. And down the line, Coefficient wants to integrate Verily tech to help employers better control their costs.
Many insurance companies already give customers rewards if they hit goals set by wearable devices in exchange for sharing their data. That data is valuable to insurance companies so that they can know whether or not they are paying too much to cover an individual. Verily’s tech could help insurance companies triage even more data to offer specific types of policies for certain people.