Lumity: Bringing Clarity to Corporate Benefits

By Josh Stein, DFJ Partner

I’m thrilled to announce DFJ has led a $19 million Series B financing for Lumity, a technology and data-enabled health insurance broker that optimizes health plans for SMBs.

Lumity is a trailblazer in the health insurance industry. Traditional brokerages make their money by capturing a percentage of prem­iums paid, and as a result, are incentivized to increase costs annually, since this also increases their cut. By turning the model on its head, Lumity is challenging the status quo with data science and advanced analytics to help companies understand the risks they’re trying to insure, and allowing them to lower their healthcare costs overall.

This is exactly the kind of technology-driven disruption that we’ve seen across a wide range of sectors over the years.

A core investment thesis at DFJ has been looking for middlemen inefficiencies in large markets.

We’ve seen this strategy used with great success by a number of our portfolio companies: Redfin reinventing the economics for real-estate agents, Remitly changing the cost model in financial services, and Tesla cutting out dealers to sell (and service) directly with customers.

The data-as-a-disruptor thesis has been acutely relevant in healthcare, where data sets are not only large, but also incredibly complex.

Partnering with an innovator like Lumity, that can use data to provide a better consumer experience and create a new standard for the industry, is exciting.

Lumity’s strength is in its product-centric focus, which has been a core value for the team. Lumity was founded in 2014 with the goal of offering healthcare benefits at a lower cost by better understanding the risk profile of employee populations.

The tagline, “data drives better benefits” defines Lumity’s value proposition; by providing deep insights through data, Lumity offers a simpler experience in plan management and selection. The result is a better experience for users.

For employers, the benefit is clear: Lumity can help them save anywhere from 20–40% on healthcare premiums while providing the same level of benefit coverage. Lumity’s growing list of customers includes Wealthfront, Lyft, Flatiron, and gofundme.

Employees can access personalized decision making tools to help them select a plan. Lumity uses historical data to estimate a customer’s out-of-pocket spend and coverage under a new insurance option — voilà, you now can make an educated decision about which plan to choose. Lumity ensures people are informed so they won’t pick the most expensive plan — rather they’ll find the plan that makes the most sense given their health profile.

One of the most exciting parts of this investment is the opportunity to work with an entrepreneur I’ve long known and respected: Tariq Hilaly, Lumity’s CEO and co-founder. Tariq was previously the co-founder at Motif Investing, an investor at Alliance Bernstein, and a consultant at BCG, where we worked together briefly. He’s a visionary leader with an unwavering focus on customer-centric product development. We’re also excited to be partnering with our friends at True Ventures, Rock Health, and Social Capital, who led the earlier fundraising rounds.

If you have been using the same health insurance broker for years, you should give Lumity a shot — it is likely they can save you 20% or more on your insurance costs. In fact, if your broker tells you each year, “congratulations, you managed to keep your cost increase to less than 10% this year,” then I really suggest you check out Lumity.

Josh Stein is a partner at DFJ