Bitesize InsurTech: Ottonova
July 26, 2017 Chris Sandilands
Ottonova is a German digital health insurer.
Ottonova is the first health insurer to be founded in Germany for 17 years. Debeka, one of Germany’s largest private health insurer, recently invested €10m, pushing the company’s pre-launch valuation close to a whopping €100m. Clearly something big is happening in the €34bn market.
The name, in case you’re wondering, is not a nod to Oscar, the US health insurance platform with a slightly Germanic name. Instead, it refers to Otto von Bismarck, who introduced health insurance to Germany in 1883.
Ottonova was co-founded in 2015 by Roman Rittweiger, a doctor who has spent the last two decades working in health management startups. The venture has close to €40m of capital on its balance sheet and thus obtained approval from the German regulator (BaFin) to issue policies in June this year.
Ottonova is targeting young professionals with an app. This app provides insureds with a digital concierge service, a personal medical timeline (e.g. past appointments, prescriptions), and the ability to make claims by photographing receipts and uploading them. Products are rich but simple (“Business class” and “First class”), and reimbursement often happens within minutes.
The firm hopes to use social networks and affiliate partners to acquire customers – a bold move considering that no company has operated on a direct-only model in this market to date.
The Oxbow Partners view
Ottonova joins a small group of startups setting up as fully fledged insurance companies – Lemonade (non-life, USA) and Gryphon (life, UK) for example. This already makes it stand out in the InsurTech community.
We like the concierge element to the proposition: there is a clear user benefit from collating medical information in one place and it could give Ottonova the customer touchpoints that all insurers crave. The functionality is not unique (AXA and Generali offer similar, for example) but Ottonova demonstrates, we believe, the value of a well-researched proposition with a well -executed user experience. A number of incumbents are already investing into updating their digital platforms.
The challenge will be customer acquisition. Health insurance is not the kind of product where people switch frequently, so getting to customers at the right point in the cycle will be critical. It is also a price-driven product for many people in the private system in Germany, something which could leave Ottonova disadvantaged against established players who have greater scale (but also legacy). It could be the usual race between the marketing budget and revenue growth – unless they have some unannounced bulk deals lined up.
Ottonova is a remarkable move in German InsurTech – it was the talk of the town on a recent trip to Munich, and is already provoking a reaction from incumbents. We are bullish on its prospects.