eHealthInsurance Succeeds in Role of Broker
While most health care Web sites have either "flamed out or are in the process of doing so," eHealthInsurance Services Inc. has succeeded by serving as a "broker" between insurers and both individuals and employers, the Wall Street Journal reports. To achieve national exposure, the Sunnyvale-based company spent 30 months applying for insurance-broker licenses in all 50 states and in the process, "enlist[ed] both health insurers and state insurance regulators as allies." Currently, eHealthInsurance offers 4,000 different health plans provided by 54 different insurers across 95% of the nation. One reason for its success, the Journal reports, is that it has worked with "traditional insurance brokers," which other health care sites have "disparage[d]" as "Old Economy dinosaurs." In addition, eHealthInsurance has added a toll-free phone number and "several dozen traditional agents" to augment its Internet services.
The Journal reports that having a Web-based system "pays off" in "efficiency and customer retention." Ten percent of insurance applications filed on the site "have to be reworked or rewritten to satisfy" insurers and regulators, compared to an industry average of 30% to 40%. The company has also succeeded in "simplify[ing]" the application process, making it "far easier for individuals and small businesses to compare a variety of health plans and to choose the one that suits them best, both in terms of coverage and cost." The Journal reports that eHealthInsurance's business model is "lucrative." The company receives 10% to 15% of its customers' monthly premiums, creating "gross margins in excess of 80%," according to CEO Gary Lauer. The Journal reports that in January, the firm "close[d] a new round of financing," receiving $32 million from WellPoint and the investment firm QuestMark Partners (Hamilton, Wall Street Journal, 4/5).