Why we invested: Koltin is offering health insurance to vulnerable seniors in Mexico

Latin America will soon be home to an unprecedented proportion of older people. Although the share of the population over 60 years old is still relatively low compared to other regions, in only 30 years, one in four people in the continent will be over 60. To put such trends into perspective, it took Europe and North America more than twice as long to experience a similar shift (65 years in Europe, and 75 years in North America). 

An aging population represents a significant challenge for the health system since older people’s needs are more numerous and more complicated. Older adults are significantly affected by climate change-related health issues, increasing the pressure on the health system and their own medical expenses. Extreme heat, extreme events, poor air quality, and vector-borne diseases, among others, are dangerous threats to the senior population’s health. Furthermore, although health needs increase towards the end of life, investment in healthcare tends to be focused on the first half of life, investing in hospitals over primary health care.

In this context, many older people struggle to access care and, even when services are available, costs are a barrier. Insurance doesn’t help in these situations, because it is also unaffordable, leaving most without access to insurance the impossibility of affording sufficient coverage. As a result, most families are forced to pay high out-of-pocket costs for unexpected medical expenses, even when they receive care at a public hospital. One study found that, on average, 14 percent of households face medical costs exceeding 10 percent of their incomes, mainly related to older adults’ presence.

Koltin is filling the gap, it is the first company in Mexico to offer private health and accident insurance, and preventative healthcare to people over 60 years old, thus, helping to reduce diseases and disability of this group and saving the cost of treating chronic conditions.

Innovation

In Mexico, families depend on the public health system, and only 1 percent of people over 65 years old have private health insurance (a situation that worsens in lower-income segments of the population). As a result, seniors must depend on unreliable public services or turn to high-cost private providers to get routine care and treatment in the case of accidents or illness. These high out-of-pocket costs (approximately 40 percent of the family health expenses) create barriers to accessing good healthcare services and link weak financial status to poor healthcare access. In sum, lower-income households are particularly vulnerable to financial risks related to health issues.

Koltin‘s overall objective is to redesign the healthcare experience of seniors in Mexico and beyond by taking a data-smart approach to lowering health insurance costs to allow unrestricted access for older populations. Koltin meets seniors where they are, using information technology to deliver care through familiar channels, like phone calls and WhatsApp. For example, 75% of the current Koltin user base has a Whatsapp account. This allows the startup to focus on preventive care and address behavioral patterns that lead to domestic accidents, illnesses, and eventually premature death (behavioral patterns account for approximately 40 percent of deaths, compared to the 10 percent of deaths caused by health care quality).

In older populations, the demand for health services is more complex and expensive. A better comprehension of the health and patterns of each potential subscriber is key to meeting the older population’s needs. For that reason, the startup heavily relies on data analysis to understand each person’s risk profile and offer tailored health programs to each one. By doing so, they enable seniors to remain healthy and independent.

These two approaches have allowed Koltin to offer insurance plans for as little as $3 a month for simple accident insurance and purchase more comprehensive health coverage for as many family members as they wish. Furthermore, Koltin offers such plans both simply and quickly: it only takes one day of the underwriting process and no restrictions on pre-existing conditions.

Impact

Since its creation almost one year ago, Koltin has experienced significant growth in the number of users. Month-on-month growth has averaged 40 percent, surpassing 500 clients after a few months since its official launch with a retention level above 90 percent.

In Mexico, the family is the primary source of healthcare for older adults. In most cases, (between 95 percent and 99 percent of cases, depending on the type of activity), an unpaid family member is responsible for caring for people over 65 years old. 

Also, this startup’s innovative idea helps to address the gender gap in the region. Providing low-cost health services alleviates women’s unpaid labor since women are largely responsible for care in a household. In addition, in Mexico, women have a greater life expectancy than men, so Koltin is able to serve large numbers of women. More than half of its users are female (approximately 75 percent). 

Koltin was developed to operate in a context of overwhelmed medical services, which leads the public system to focus more on damage control rather than prevention.

Growth potential

There is an enormous market to be captured by Koltin. There will be 18,000 new baby boomers in the region who turn 65 years old every day for the next decade. This shift in the population structure creates a clear opportunity for Koltin’s scalable and innovative model of providing high-quality health insurance. 

This group lacks health insurance, around 20 percent of the actual older adults are not affiliated with any kind of health services. Furthermore, mobile phone penetration is expected to reach more than 70 percent. Both facts create a perfect match for Koltin’s solutions, using information technology to drive preventive care and help seniors dramatically improve their quality of life without compromising their financial security. This innovative model also has the power to quickly scale to other countries in the continent.

 The Catalyst Fund model delivers outsized success compared with other accelerator programs. We accelerate startups that excel on three fronts:

• Impact: Catalyst Fund startups deliver (or, in the case of B2B firms, facilitate the delivery) of life-changing products and services to underserved populations. These can include financial services like loans, savings, insurance, and investment, but also access to productive inputs or essential services such as energy, sanitation, and water.

• Innovation: Our startups are pioneering game-changers that are innovating new products and business models. They drive the sector forward by demonstration effect and via the learning that Catalyst Fund documents and shares. 

• Growth potential: Catalyst Fund startups are distinctively investment-worthy, developing businesses that are scalable, with high growth potential. Our startups are selected by an Investor Advisory Committee, who have deep experience in emerging markets and nominate high-potential startups, and then sponsor and mentor them through Catalyst Fund. As a result, our startups raise more funding than startups from other accelerators.