Insuring Future Fertility

What is the scope of the fertility problem today?

LAURA MCDONALD: When we look at statistics, one in six people will need fertility treatment going forward. Historically, we haven’t had much data going back, let’s say 20, 30 years ago, but people are more aware than ever before about there being a fertility crisis. Even the World Health Organization labeled it a global health crisis in 2023, indicating that we need new mechanisms of funding. The tailwinds for this product, and for awareness, are really at an all-time high. But there are certain drivers that make us think that people may need fertility treatment to a greater extent going forward.

CHRISTY LANE: From the clinical side, there’s a lot of talk around increasing rates of infertility, but the reality is that the vast majority of what’s driving people needing treatment for infertility is delayed childbearing. Women are focusing on career, focusing on education, and they’re just voluntarily deciding to have kids later in life. Because age is the strongest predictor of infertility, we’re seeing an uptick in the required amount of treatment. That being said, there are advances in clinical medicine for infertility. We’re getting better at looking at egg quality, and sperm quality, and embryo quality, for example, and just better medications and tools. So, in parallel to seeing an increasing rate of infertility, we’re also seeing higher success rates with treatments, which is great.

Has insurance coverage kept pace with the increasing success in treatments?

MCDONALD: When we look at North America, and the United States in particular, people are generally woefully under-covered in this space. Health plans typically do not provide coverage, or [to] a very limited degree. In terms of states, there’s really a handful that offer any sort of guarantee of coverage, and it’s usually at a certain point, like maybe at one round of IVF, later stage. When we look at the insurance landscape, the existing models [for fertility] tend to focus primarily on group benefits, typically through Fortune 500 companies. Those are incredible companies in that space, and they really opened up demand for fertility benefits, say, in the past five to 10 years. But they’re very, very expensive for employers to implement. What we’re starting to see is that employers are decreasing their coverage in that space. Employees maybe have only a limited amount of coverage. If the employee leaves, they can’t take it with them, and we’re seeing very much a shifting job market. We still have 60% to 80% of people with little to no coverage, because they’re either gig economy, contract workers, or they work for employers that are just not big enough to afford a group model.

How is Flora addressing that?

LANE: Flora is the first individually underwritten, individually owned fertility insurance. This is a net new product. This had not existed previously. We had to develop novel underwriting models, actuarial models, and get reinsurance on the back end to support the product. It really is a game changer in increasing accessibility. Now it’s not only the Fortune 500 companies that are offering it [and] women are getting coverage. This is available direct to consumers. The product [can be purchased by] women between 20 and 34 who are not already undergoing treatment for infertility. They go through our proprietary underwriting process, and then they can quote and bind the policy right there online, and they have access to up to $50,000 of coverage up to age 45. This is also available through employers. We are really filling a gap in either gig economy or small- to medium-sized employers that can’t afford to offer these more expensive group benefits. We’re seeing employers with huge interest in offering this, either as a voluntary benefit or as a partially paid benefit through the employer.

MCDONALD: On the employer side, even for those larger groups that might already have a group plan in place, they’re also seeing this is a way to augment that coverage, because maybe that allows them to decrease their group costs. For many of them, that might mean a lifetime maximum on the group side of $10,000 to $20,000, but if they layer Flora on top of that as a voluntary benefit, it ensures their employees have that much more coverage if they need fertility treatment down the road. And the average cost of treatment is about $50,000, so if you only have $10,000 of coverage, it’s not going to go very far.

How does this help women balance family and career when they might be changing jobs frequently?

MCDONALD: Because it’s individually underwritten, even if your employer helps pay for it, it’s in your name. If you leave the company, you can take it with you and just take over the premium. Affordability is really key, because when you look at the next generation…they’re going to be moving from gig to contract to corporate. They have to in their career; job stability doesn’t exist as we know it. When we look at Gen Z, millennials, they will have, on average, about 12 different jobs, or even careers, across their lifetimes. They need something that moves with them.

LANE: The other thing to add is that the way in which women, in particular, are planning their education and career has shifted substantially, where you’re seeing a lot more women going through extended post-secondary education and really focusing on building a career before they’re even thinking about finding a partner, starting a family. This allows for that flexibility of planning for potentially having a family, and then also being able to pay for it. What we’re seeing is that, in terms of sources of debt, in the current generation, including even in millennials, the top two are going to be mortgages and student loans. Now the third, which is catching up quickly, is fertility. You’re seeing people go into substantial debt, $50,000, hundreds of thousands of dollars in credit card debt and high-interest loans in order to pay for this. What we’re really doing is preventive, it’s proactive. They buy a low, predemand amount policy that gives them coverage and gives them that flexibility in terms of their life course.

What is the technology behind Flora?

LANE: I oversee product at Flora and spent a big part of my early career as an academic. I led the Wearable Health Lab at Stanford for a number of years. So, I had been doing novel risk modeling, novel predictive analytics, previously, and my first company was the first to ever do wearable device-based underwriting for life insurance. The team has experience in bringing new risk models and new underwriting models to market. But this was a little bit different in that we had to develop totally net-new underwriting models and actuarial models. The underwriting was based heavily on existing data around what predicts infertility, so who will be one of the one-in-six who needs treatment, and then of those one-in-six, what’s driving claims propensity, who’s going to end up needing what kind of treatment? That, combined with some actuarial intelligence, is how we built this model.

What those models allowed us to do is gain reinsurance capacity to pay claims, which is often a really tricky thing for an MGA to do. We do have an amazing technology back end and front end. We operate as a digital MGA. The entire process is online. People can quote, rate, bind online, whether they’re coming in as a consumer or they’re coming in as an employee, and we’ve just built a really robust tech stack to enable that.

You’re underwriting the risks on an individual basis?

LANE: Yeah, and that had never been done. The difference is in the existing group models, they’re actually not underwritten in any way. Essentially, the employer is saying, we want to offer some level of coverage to our employees, and then the group companies that they’re working with today are enabling that through payments, but also through in-network clinic partners. In our case, we want to look at individual risks, so we can price it appropriately and allow you coverage but also allow flexibility. In our case, women can choose where they want to get treatment, as long as it’s a board-certified provider.

MCDONALD: That individual underwriting, that’s where that reinsurance comes in. That’s a big differentiator for employers. The group models don’t have reinsurance backing. Meaning the employers are on the hook when there’s utilization. And so, versus our model, your employer can help support the premium, or the employee can pay entirely voluntary, but if treatments are needed down the road, ourselves and our reinsurers are the ones that cover those claims. The employer does not need to get involved there. From HR complexity, from tech integration, and from keeping your costs very stable, it’s very attractive to employers and brokers.

Does Flora offer more than the coverage?

MCDONALD: It really is capital plus community. The capital is there, that’s the dollars to pay for treatment down the road if you need it. But we’ve also partnered with some leading women’s health companies. Flora is a product, but it’s also a brand that’s bringing together the best in women’s health for our policyholders.

LANE: The other thing I’ll add is that one of the strongest drivers, other than age, of infertility, is lifestyle—things like physical activity, smoking, nutrition, and stress. A lot of what we’re planning to build into this community is personalized lifestyle education, helping women understand their reproductive physiology, helping them understand potentially their risks, and then providing them with behavior changes they can make to improve their chances of conceiving naturally.