SimplyInsured, which helps small businesses compare and purchase employee health insurance plans, has closed a Series A of $5.9 million led by Polaris Partners, with participation from Bessemer Venture Partners, Altair.VC, Corazon Capital, and individual investors.
The startup not only lets small companies compare rates on health insurance, but also allows them to administer plans on its platform, avoiding an onslaught of paperwork and online forms. It launched out of Y Combinator in 2013 and got seed funding of $1.75 million just two months ago. The latest round brings SimplyInsured’s total raised so far to $7.7 million.
SimplyInsured’s Series A will be used to increase the size of its sales and marketing team, which currently has five people, to about 20 to 30 employees.
The platform’s algorithm considers the monthly premium paid by each user and the estimated cost of an average year of medical care, before ranking plans based on their total cost. Results are further filtered by the age, location, and other factors specific to each employee, with the goal of finding the least expensive plan based on their medical needs.
“On average, when we walk into an account of with an existing health insurance plan, we are able to find them another equivalent health plan that is $50 to $100 a month less expensive ($500 to $1,000 a year) than what they were previously sold,” says co-founder and chief executive officer Vivek Shah.
SimplyInsured’s rivals include 400,000 local insurance brokers throughout the U.S. and startups like Zenefits (another Y Combinator alum) also help SMBs compare and purchase health plans online. Shah says that SimplyInsured’s advantage is its instant quoting technology.
“We have the only 50 state quoting engine for SMBs, and by our cost estimation engine, we can give you apples to apples estimates about the cost of doctors visits, emergency room visits, etc. We are also the only insurance broker that provides every employee with a Mobile ID Card the day their insurance starts.”
Another potential competitor are health insurance exchanges, which have increased in number under Obamacare and include programs like California’s Small Business Health Options Program (SHOP). These sites have less plans and features, however, than SimplyInsured.
For example, Shah claims that SHOP exchanges only compare about 10 to 15 percent of available health plans in a market, while SimplyInsured offers all of them. The site also has features and services like payroll integration, claim fighting support, and 24/7 customer service.
“Bottom line–we offer a comprehensive set of health insurance products with a full benefits management software platform,” says Shah.