Dive Brief:
- Friday Health Plans announced it would shut down last week after more state regulators took action to limit the insurer’s operations as it struggled financially.
- The insurtech, which had raised hundreds of millions in venture capital and debt funding, launched in 2015 to offer a “simpler” experience for people buying coverage on the Affordable Care Act exchanges.
- In a statement on its website, Friday said it was “unable to scale our financial infrastructure to match the pace of our growth and secure the additional capital required to run our business.”
Dive Insight:
Friday had previously been operating in seven states. But the Denver-based insurtech didn’t offer plans in Texas and New Mexico in 2023, and it was placed into receivership in Texas in March. More states, including Nevada and Georgia, took action last week to take control of the struggling health insurance startup.
As it winds down operations, tens of thousands of beneficiaries will have to find new plans. According to the Atlanta Journal-Constitution, more than 35,000 people in Georgia could lose their coverage.
In a statement, Colorado Insurance Commissioner Michael Conway said Friday has enough capital to continue operating in the state through the rest of the year, but state regulators will continue monitoring the company.
“Friday’s problems are national — the company’s aggressive growth in other states around the country got ahead of their financing. While Friday Health Plan of Colorado has maintained the capital required by Colorado law, the problems in other states and with the parent company are now impacting the company here,” he said.
Other insurtechs like Bright Health and Oscar Health have also struggled financially over the past year. Bright is hoping to exit the insurance business entirely as it explores bids for its Medicare Advantage plans, and it recently sold its telehealth business to a health technology startup.
In May, Oscar said it would leave the California health insurance marketplace after failing to meet performance metrics. Mark Bertolini, former CEO of traditional insurer Aetna, recently took the reins at Oscar as the company shakes up its leadership in the wake of financial shortfalls.
