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Zenefits Rival Raises More Capital, Led By Insurance Allies

By
Heather Clancy
Heather Clancy
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By
Heather Clancy
Heather Clancy
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March 21, 2016, 10:12 AM ET

Maxwell Health, a startup specializing in cloud software for managing employee benefits such as health or life insurance, differs from its better-known rival Zenefits in one important way.

It’s not hiring legions of insurance brokers and benefits consultants. Instead, the Boston-based company is turning them into allies.

An online exchange launched last October by insurance giant MassMutual, for example, is based on a version of Maxwell Health’s technology. The platform manages retirement plan enrollments and life insurance selection, with more products forthcoming throughout 2016.

“Our marketplace solutions recognize that the role of the benefits advisor has evolved into something new: employees expect broader and deeper levels of guidance than ever before, and employees no longer accept a one-size-fits-all benefits approach,” said Maxwell Health co-founder and CEO Veer Gidwaney, in a statement.

Approximately 20,000 consultants from a growing number of top 100 U.S. insurance brokerages are using Maxwell Health’s software to automate certain aspects of their client interactions. “Typically, they have lacked the technology to provide a cutting-edge experience,” Gidwaney tells Fortune. “You need to find a way to achieve scale, and this is one way to do it. [Zenefits] has done a lot to make it clear to benefits consultants that they need to innovate.”

This morning, Maxwell Health disclosed several powerful new allies, which have lined up behind its $22 million Series C round. The funding includes new investors GIS Strategic Ventures, an investment arm of Guardian Life Insurance; Canadian firm Sun Life Financial; and Cendana Capital. The infusion brings the company’s total funding to $56.4 million.

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Maxwell Health will use the new capital to expand the products offered through its benefits marketplace—including “non-insurance” offerings such as telemedicine services or healthcare concierge advice. It also plans to expands the data analytics in the software, to provide customers with insights into how products are performing, and to drive coverage recommendations for marketplace visitors.

Dozens of software companies are staking their futures on making human resources functions such as payroll processing and employee benefits management simpler for small companies. Another startup seeking to partner with insurance brokers, rather than displace them, is EaseCentral.

Zenefits has gained the most notoriety is this segment by virtue of its $4.5 billion valuation. But the company is operating in crisis mode. CEO Parker Contrad was removed last month amid revelations that lax training procedures had drawn the attention of state insurance regulators. One of its fastest-growing rivals is Gusto (formerly ZenPayroll), which started with payroll automation and began expanding aggressively into health insurance last fall.

About the Author
By Heather Clancy
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