Supercharging the insurance benefits ecosystem

My chat with Shannon Goggin, Cofounder & CEO of Noyo

October 18, 2022

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I’m fascinated by the experience, innovation, and productivity unlocked by connecting disparate systems across a value chain in any industry. I explore that theme in this chat with Shensi of Merge. I mentioned earlier that I’m trying to explore the insurance landscape across India and the States. I have talked to Rahul of Verak Insurance in India.

Today’s chat is with Noyo’s CEO, Shannon, who sits at the intersection of those two areas. I first connected with her nearly two years ago during the pandemic lockdowns. She announced Noyo’s Series B earlier this year. I caught up with her to better understand what she’s working on.

In this chat, Shannon and I talked about:

  • The relatable problem of broken benefits experience

  • The tangible impact of her plumbing work on people

  • Taking on the entire benefits administration cycle

  • Enabling new consumer experiences

  • Working with carriers and benefits software players

  • Ripple effects of data inconsistencies on costs & value chain

  • Engineering complexity of connecting disparate systems

  • Misconceptions & challenges in benefits tech

  • Privacy considerations in insurance data management

  • Evolution of Noyo’s ambition and strategy

  • Digitization journey of the benefits industry

What I enjoyed in this chat was Shannon’s ability to break down boring and complicated aspects of insurance infrastructure using easy-to-understand, relatable situations, and examples. She credits that to years of pitching and explaining the nitty gritty aspects of what Noyo does.

Sar: I draw my model of how I think about Noyo from the food ordering market. An online ordering company faces this strategic problem of not being able to become the system of record for all sales of their customers because they only see the online orders they bring for merchants. The most common way to solve this is to integrate with their customers' POS systems. The POS market is highly fragmented. Many of them don't have API. The APIs vary in quality, and integration timelines are unpredictable. There are middleware companies that reduce this pain by doing all of that and offering it as an API.

My simplistic model is that you are one such middleware company in the insurance market. You sit in between the employee benefits platforms and the insurance carriers. You build out the connections, so neither side has to go through the process of creating those connections by themselves. You do much more than simply connect the systems. Talk about what you do and how you see Noyo’s role in the ecosystem.

Shannon: That’s a great illustration; there are a lot of parallels. Noyo is a benefits data platform, so we are making it possible to connect all the apps across the benefits ecosystem. Everything we build starts with the member’s experience – the person needing access to benefits. Think about something as simple as seeing the doctor or the dentist. You should be able to go in, get care, and, if you have insurance, not worry about much else. Instead, health insurance is scary. It is expensive. It’s a black box. Instead of focusing on their health, people have to deal with endless administrative work and wonder about the next unexpected bill that will appear.

So many of those poor member experiences trace back to the benefits data. People’s information is spread across many different systems, which don’t talk to each other and constantly disagree on basic things like their name, date of birth, and what coverage they are enrolled in. Well, if you can get the right benefits data in the right place at the right time, you can build products that give people confidence in their coverage. Noyo makes this benefits data accessible and useful. We connect to many different systems to get a full picture of someone's coverage and then serve that data safely and securely to the products people already use to manage their benefits.

Sar: The problem you're describing and solving is relatable, but you're not going straight to the consumers. You're not selling to someone like me.

Shannon: That’s right. Noyo wants to power all the apps and tools you use. We work with payroll and HR software companies that enable employers to offer employee benefits. We don't sell directly to employers or insurance brokers who help employers make benefits decisions.

I'll give you an example to make it more tangible. Let’s say you join a new company, and on your first day, you're signing up for insurance coverage, and you log into your company’s HR system. You browse through the options and pick your medical and dental plans. You will get a confirmation message saying your coverage will be activated in a few weeks. Behind the scenes, someone is coordinating with the insurance companies, submitting a coverage application on your behalf, and managing the paperwork to get you enrolled. It’s a time-consuming and manual process. With Noyo, those systems use our APIs to get your coverage in place.

Sar: Yeah, I remember getting annoyed in a previous job because I had to ping our people team to get my coverage status. And they would have no idea, and it would take them a while to get back to me. A telephone game was going on behind the scenes. The people team was pinging the account manager at our benefits software company, who was pinging the broker or the insurance carrier. You enable me to get real-time status on the dashboard of my benefits portal, so I don't have to ping HR or even log into my insurance company's portal. Honestly, I don't know how real-time or accurate the status I saw was, but it was helpful psychologically to know that the status could change on my dashboard!

Shannon: The psychological aspect is powerful. Just being able to see that status and know that your coverage is in place builds trust. This type of user problem is the most energizing to solve – taking something from endlessly frustrating to just feeling like magic. I spent years building products for HR administrators and employees at small businesses when I was a product manager at Zenefits. The user problems are not a mystery – well-designed, user-centric software can dramatically improve how people interact with their benefits. What’s really difficult is getting the data to power those features. At Zenefits, users loved our virtual insurance card that they could bring to the doctor and had all the needed information. But since insurance companies don’t make member IDs easily available, we had whole teams of people making phone calls to insurance companies asking for that member ID and then keying it in. In that case, what was magic for the users was very expensive to operate.

Noyo snaps into the insurance company’s systems, whatever they look like, and makes them API-enabled. Suddenly, building those magic features gets a lot easier.

Sar: You started with the enrollment piece a couple of years ago. You now do multiple things through the policy administration cycle. Can you talk about where you are headed?

Shannon: We started with enrollment because getting things right at the point of enrollment impacts everything else downstream. What you are enrolled in determines what care you will access, what bills you will be responsible for, how much is deducted from your paycheck, and so on. Getting that right is critical.

From there, we have expanded our infrastructure layer to handle the entire policy administration lifecycle: policy setup, member enrollments, changes, and renewals in one place. And beyond that, we plan to power any consumer experience that involves benefits.

Sar: So you want to embed the entire experience from enrollment to renewals anywhere I can interface with my benefits? You are powering the employer systems but want to expand to consumer apps. You don't just want to keep the data consistent and accurate; you want people to take action through Noyo. And this is where my food-ordering middleware layer analogy breaks!

Shannon: Yes, exactly. We want members to access their benefits data where and when needed.

Consider this use case: someone is doing financial planning with their family for the year, and they have a kid that will need braces. This person and their spouse have different dental plans through their companies. How much should they put in their 401k? How much money should they put in their flexible spending account? How much money should just go into cash savings? These are important financial decisions. Today we focus on use cases for employer-centric benefits software, but ultimately we will power benefits experiences everywhere the member is.

Sar: I think you have used more practical examples to explain what you do than anyone else I have spoken to. I love that!

Shannon: Hah - that comes from many years of people having no idea what I'm talking about when I get into the technical details of insurance infrastructure.

Sar: Let's say Wealthfront decides to show me my benefits information in the app. They can work with you. Would I see Noyo UI?

Shannon: We would authorize that access, and the app gets to own the end-user experience.

Sar: So you go and try to hunt me down in the insurance carrier systems, right? What happens when you detect data inconsistencies?

Shannon: Developing the technology to get and normalize this data comes with many interesting challenges. These systems disagree constantly, and we detect and surface those data conflicts. For example, it’s not uncommon for the payroll system to think someone is enrolled in coverage, but the insurance company does not. Or the insurance company having two different dates of birth on record for the same person. First, you have to determine what is actually correct and then make changes across multiple systems to bring everyone back in sync.

Sar: Are these changes processed in real time?

Shannon: Most likely, these changes aren’t processed in real time. It takes time to work through the insurance company’s systems, which are based on very old technology. That lag can cause unexpected ripple effects as well. For example, someone might log in directly to their insurance and change something about their policy, which could affect the premium. The insurance company doesn’t tell the employer, so the HR system of record doesn’t get updated, and payroll deductions are suddenly wrong. It might be months before anyone at the person’s company notices that the company’s monthly bill has changed because changing one person’s premium change affects how much the company pays for coverage. Now, the finance team gets involved to figure out what is happening. It’s a mess.

All of this is a significant burden on the end user. It also drives up costs in the system for everyone. A lot of money is spent on distribution and administration; at the end of the day, that overhead is bundled back into premiums. There are lots of places where cost can be removed from the system. Distributing and administering plans more efficiently means insurance companies can put better products on the market at better prices, which is good for everyone.

Sar: That’s an amazing case study for how technology can suck costs out of a system. Do you become a customer acquisition engine for the carriers in the long run?

Shannon: Carriers need to meet their customers where they are. If they can’t do that, they’ll lose to competitors who can. To do this, they must find ways to work with the rapidly growing segment of modern HR tech companies. This means offering products and services that are relevant to the employers who use those systems, but it also means being able to connect digitally and eliminating the terrible operational processes behind the scenes that make the experience so painful.

It is common for insurance companies to choose one very large payroll or HRIS system and focus their efforts because it is so expensive to build and manage these partnerships and integrations. The reality is HR software is booming, and carriers need to be compatible with all of them; the savviest carriers are investing aggressively to do this. Noyo changes the dynamic by making it easy for these insurance companies to work with those growing platforms through us and solve the core data problems that are holding everything back.

Sar: Besides the growth you described, what's your pitch to the insurers for giving you read access?

Shannon: Noyo helps everyone in this ecosystem exchange data securely, quickly, and accurately. With better data, our clients see more growth, higher customer retention, lower operating costs, and a better member experience.

Being able to read the data allows us to turn on really powerful features, like detecting data issues that would otherwise turn into expensive claims or billing issues down the line. The return on investment is especially obvious when they consider what they are already spending on the workflows we enable. On their own, they may spend upwards of $500k to connect with just one external partner, which is not sustainable.

Sar: How do you convince them to give you write access? They don't care about owning the customer relationship like some tech companies do, right?

Shannon: All insurance companies have to accept enrollments, and we make handling these enrollments easier and more efficient. When we explain our approach, they’re generally excited about how much cleaner we make this process and its positive impact on their members.

Sar: What have been the most common misconceptions of what you do over the years? How has the way you pitch Noyo evolved?

Shannon: For people who come from benefits and understand just how complex these issues are, sometimes it just feels too hard to solve. I can’t tell you how often I’ve heard, “I love your ambition, and that’s exactly what the industry needs, but it’s just unrealistic.” I love working with people who aren’t afraid to reimagine how things are done, especially when they understand the space and are not naive to the challenges. That’s where the magic is. As far as the pitch goes, wow, I have bored people to tears explaining the intricacies of technical integrations and data workflows. Now, I spend more time talking about the user problems we solve and how cleaning data is the key to a great member experience.

Sar: I imagine most of your team hasn’t worked in the insurance industry and has software-centric habits and instincts. What have been the challenges?

Shannon: There's a misconception that benefits tech is just the same as fintech, but it is much earlier in its digital transition. This makes the opportunity enormous, but it also means we're working on very complex technical challenges. Some core systems we work with were designed before modern software, so they don't operate on the commonly accepted software principles. There can also be a steep learning curve in the domain. We are purposeful about balancing our team of people with extensive industry knowledge and those who bring deep technical expertise from other industries.

Sar: Talking about the privacy considerations of what you do.

Shannon: Insurance and benefits touch a lot of sensitive personal data. Someone applying for insurance coverage is putting down PII, which will go onto an enrollment form that gets emailed around, printed out, keyed in, and stored on any number of hard drives. APIs offer granular control over how data access is provisioned, and there’s a log of where it went and how it’s used. Privacy and security is an important feature, and we invest in them heavily.

Sar: Who do you consider a customer versus a partner?

Shannon: Noyo’s core product is for benefits software companies, meaning any software company building a benefits module for employers and employees. Our product gives them access to a network of insurance companies we support. We also work with insurance companies, adding them to our network and giving them a plug-and-play way to distribute their benefits products efficiently. That means we build products and services for insurance companies as well, and we work with both software companies and insurance companies as users and customers.

Sar: What do you see now that you didn’t when Noyo was a year old?

Shannon: We invested so heavily in solving the benefits data problem early on to make our first product dramatically better than anything else on the market. It quickly became obvious how powerful access to clean, trusted benefits data is for improving every aspect of the user experience. For us, it has transitioned from being a feature of our product to the foundation on which many applications will be built.

When we were getting started five years ago, data was really not central to the mainstream conversation in insurtech. Today, the challenge is better understood but benefits tech is still incredibly early. That’s why it’s such an exciting time to be building here. There is so much creative energy in this space right now as more startups emerge, more investment goes into the space, and technology continues to do its job.

Sar: When you closed your seed round, I’m sure you had a vision for where you would be in a couple of years. Two additional financing rounds and a hundred teammates later, what are you most proud of today? What about the company and the industry you wish had changed or evolved more quickly?

Shannon: We started the company to make it dramatically easier for modern software companies to build benefits experiences for their users. We built APIs to set up new coverage, get people enrolled throughout the year, and handle renewals. The hard part isn’t actually sending those requests off to the insurance company; the hard part is knowing if the changes actually happened. Getting clean, trusted data out of these insurance systems is one of those things people used to tell me was impossible, and I am proud of that technical advancement that now powers the features that are so valuable for our users.

Because benefits are so early in its digital evolution, it takes a lot of collaboration, creativity, and hard work to make these breakthroughs. We are not working to make marginal improvements around the edges - we are working to improve how the benefits ecosystem operates dramatically. I am always going to be impatient in that respect. At the same time, I’m proud of how many of our partners and customers, including some of the biggest players in the industry, have come to the table to get creative in reimagining how things are done. There’s so much more ahead.

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