How a startup disrupted "one of the oldest of old-school industries."
Health.com.au is a disruptive health insurer from Melbourne that seeks to “reinvent how people view health insurance in Australia,” according to founder and CEO Andy Sheats.
While heading up strategy at realestate.com.au, Andy Sheats saw an opportunity to disrupt the $16 billion health insurance industry in Australia.
Sheats saw room to break in because, while many people had private insurance, customer service was dated and confusing, he said.
Health.com.au takes “a more modern, online approach to this old-school industry that allows people to actually do more online,” said Sheats.
For example, the startup lets people file claims online without sending any receipts, verifying the authenticity of the claim afterward. It also has digitised much of the paperwork that has historically been involved in the industry, he said.
Health.com.au began development in June 2011 and sold its first product in April 2012. The company was named startup of the year last month at the Telstra Business Awards.
Even with a compelling idea, breaking in wasn’t going to be easy or cheap.
Health.com.au raised $3.6 million in a seed funding round to get to launch, he said. Over the last two years, it has raised a total of $34 million in equity.
Since launching in April last year, the startup has added 40,000 customers and raised significant revenue. Sheats said the company had a run rate revenue of $45 million in August.
It has a similar-sized network to other health insurance providers, he said. “The only way we could do that as a startup business is there’s a buying group that about 20 health insurers subscribe to that actually negotiate” with the healthcare providers, he said.
Health.com.au so far has focused its products on the domestic market. It does not yet offer overseas visa cover, but will in the future, he said.
It’s difficult to be a startup in Australia for financial, cultural and regulatory reasons, according to Sheats.
“It’s ironic to me because Australia is in my mind the land of small businesses and individual people starting businesses, but it isn’t really a small-business-friendly place and it’s even less a startup-friendly place,” he said.
From a regulation standpoint, Sheats said tax rules preventing startups from offering share options to employees has been a big problem. Three-year-old changes to tax law require that the employee is taxed on the value of the share option when the option is issued, before any payments are made.
However, Sheats said he sees a lot of talent and the scene has somewhat improved over the last few years.