Outcomes-based insurance product design

25% of B2B companies expect to use outcome-based pricing by 2028. That's a 5x increase from today's 5%, according to Kyle Poyar's latest research.   This will be a painful, but ultimately healthy transition.   Buyers never wanted software in the first place. They wanted solutions. As AI handles more work end-to-end, pricing migrates from inputs (seats, tokens, usage) to outcomes (cases closed, revenue recovered, risk reduced). Less "how much did you use?" More "did it actually work?"   Thought experiment: if code becomes a commodity and features ship instantly, value shifts from building features to guaranteeing execution. You’re not selling software—you’re selling outcome insurance.   Objections are real—attribution is messy, procurement habits are sticky, and buyers hate surprises. But these are solvable with instrumentation, shared definitions of success, and clear guardrails (Manny Medina). Over time, buyers will demand outcome-based pricing because it reduces their risk. Where outcome-based pricing already fits well: AI-enabled services. Services own end-to-end execution, so attribution is clean and incentives align. Mechanical Orchard is a great example—using AI to move mainframe workloads to the cloud, taking ownership of the entire journey. When you own the “last mile,” charging for success becomes straightforward.   AI customer support vendors have also been pioneers of this model. More vendor types are on the horizon.   If you’re a founder, here’s a simple path to test outcomes pricing: • Pick one mission-critical outcome your product directly influences. • Define a verifiable metric, baseline, and observation window with the buyer. • Cap downside (floor) and share upside (tiers/bonus) to build trust. • Instrument attribution now—event logs, holdouts, and third-party validation beat hand-waving later.   Start with one outcome. One customer. One measurable result you can guarantee. We're still early in this shift, but the direction is clear.   For those already experimenting with outcome-based pricing, what's been your biggest surprise? And for those that haven't yet, what's holding you back?

Adding my thoughts to this forum piece by Dr Ng Chee Kuan: Integrated Shield Plans (ISP) should be held to greater accountability above usual commercial insurance products, to ensure the interests of policy holders, particularly in access to care. This is because they are fundamentally taking on the role of Medishield Life - Singapore's national health insurance plan. Many insurers have also been leveraging on the positioning of 'Medisave approved' ISPs to sell their products. This means ISP payors cannot just take a pure commercial view in changing terms and access as policy holders buy into ISP as a lifelong commitment and protection. An example is how policyholders buy into ISPs to gain access to private hospital care but are informed years later that access comes with conditions and limitations. Due consideration must always be given to the original benefit assumptions on which plans were sold to restrict overly drastic changes to terms and access down the road in favour of commercial interests. In the pre 3rd party payor era, the original arrangement would have been that individuals pay directly to healthcare providers and they also select what access they want and price tag they will pay for. The introduction of insurers, ie 3rd party payors into the scene serves to riskpool and protect individuals but it should not totally take away patient voice and choice. What this means is that we need stronger patient consultations behind any scheme changes, and even to play a role in the governance of such products. ISP insurers should also be better stewards, on behalf of patients, to develop better reimbursement approaches- this means paying for value and outcomes, instead of just fee-for-service. A poor reimbursement approach can incentivise more and unnecessary interventions and may itself lead to the non-sustainable nature of such products. In our current system, insurers can just pass on such risks and losses back to policyholders in the form of premium hikes, but that does not align well with the stewardship role that policyholders expect them to play. For healthcare to be sustainable, we need to shift from being volume based to value focused. This may require a more sophisticated way to reimburse based on clinically reported outcome measures (CROMs), patient reported outcomes measures (PROMS), patient reported experience measures (PREMs). ISP payors have a key role, together with providers and regulators, to build a private healthcare system that serves patients and policyholders well, for whom we all exist to serve.

"Aren’t the prevention and care aspects essentially add-on healthcare services bundled with insurance, rather than something fundamentally different at Loop?" The difference isn't in what we offer—it's in how the entire system is architected around it. When prevention is an "add-on," it gets the leftover attention, budget, and talent. Insurance companies might offer a wellness app or annual health checkup as a value-add, but their core infrastructure—claims processing, risk assessment, pricing models—remains unchanged. Success is still measured by premium collection minus claims paid. When prevention is core architecture, everything changes: Resource allocation shifts. Instead of 95% of resources going to claims processing, we invest equally in early detection systems, medical expertise, and intervention protocols. Our team includes doctors who review member health data daily, not just when claims are filed. Success metrics flip. We don't measure "engagement" with wellness features. We track the dips in claims among members that are actively consulting with doctors, early-stage disease detection rates, and long-term health improvements. Our business model only works if people stay healthier longer. Customer relationships transform. Traditional insurance sees members as risk pools to price correctly. We see them as individuals whose health outcomes directly determine our success. When someone's HbA1c improves from 6.2% to 5.8%, that's not just good for them—it's fundamental to our business model. Economic incentives align. Insurance companies profit when premiums exceed claims. We crack profit when claims decrease because people stay healthy. The kidney cancer case I keep mentioning? Traditional insurance would process a ₹10 lakh claim and raise next year's premiums. We prevented the claim entirely through early screening. Think of it like this: Tesla didn't just add electric motors to traditional cars. They redesigned everything—battery placement, software architecture, manufacturing processes—around electric propulsion. The result looks like a car but operates completely differently. Loop looks like insurance but operates as health assurance. The prevention isn't bundled with insurance—the insurance is bundled with prevention.

Are you scared of outcome-based pricing because you don't know if your product can deliver outcomes? That’s exactly why you should be thinking about it. We’re starting to see early experimentation with pricing models tied directly to customer results. Instead of pricing based on features, usage, or seat count, outcome-based pricing aligns what you charge with the value you actually deliver. This sounds risky. And it is... if you don’t know what outcomes your product consistently drives. But that’s the whole point. Designing for outcome-based pricing forces you to:  -- Get brutally clear on your product’s real impact   -- Align sales, onboarding, and CS around a few high-leverage customer success metrics   -- Build confidence in delivering repeatable value You don’t need to flip the whole pricing model today. But try asking yourself: If we were only paid when customers succeeded, how would we structure pricing?   What outcomes would we measure?   Would we be confident enough to offer it? Even exploring the answers will make your product and GTM stronger.