The insurance sector is moving from being conservative to embracing new technologies faster than most industry watchers expected.
By Philippe Santraine, Healthtech & Insurtech Management Consultant
30% of global investments feed startups in the field of connected insurance and this represents 80% of Insurtech funding. The money is flooding towards IoT, Big Data, AI and API Healthtech ventures.
Connected devices and fitbits alike are now seen as an opportunity for insurers, simply because they help them know their customers better and reward them with lower premiums when they behave well. Health connectivity helps insurers to better understand and exploit risk profiles, so are Healthtech and Insurtech ready for marriage? Well, yes. Partly because all the elements and conditions required to enable it are gathered and mature enough for commercialisation. So let’s review those elements together.
Think Outcomes, Care and Values, Not Services
Innovative insurers are not only providing services, but also results. From service actions, such as reimbursing healthcare costs, they want to build a sustainable relationship with us, their customers, contributing to prolonging our life and helping us to care for our loved ones. Moreover, here comes the emotional aspect that surprisingly conservative insurance players start to adopt. Sharing the same values, such as family, community, social and environmental impact creates stronger bonds and hence reduces churn. With the help of health-connected technologies, they assist us in taking care of our elderly and focusing on preventive care.
Basically, they are humanising insurance services. It is not all about money and premium savings.
Otherwise, consumers would keep on changing policy providers as needed, to fit their wallet. Innovative insurers want to bind us to a set of services that matter to us and the ones we care about. It is about social outcomes, such as helping our parents, helping within a community, being part of something bigger than us, participating in creating a social impact that matters.
Innovative insurers know that constantly comparing and discounting offers does not guarantee a customer’s trust and loyalty anymore, so it is no surprise that finance companies are more and more focused on binding brand with value-based experiences, instead of simply promoting a service.
Transparency and Security Drive Loyalty
Who would not want financial service providers to offer personal ledgers on any transaction related to our data, whether it is health or money? Who would not want a transparent process for handling a claim?
Moreover, it also goes the other way around. Insurers using blockchain want to use more reliable data to handle claims and prevent fraud, an important loss-making area in the business. Blockchain for insurers equals cost savings, fewer intermediaries, less delay and better control. Blockchain applications are being deployed all the time, although it will take time for global standards to be deployed and local regulations to adapt. However, their “mini-me” tailored ledger deployments are happening. Gen-Y and Millennials are increasingly aware of such technologies and are extremely fast to churn to other service providers as they see fit.
73% of Millennials want financial services from Google, Amazon, Apple, or other trusted digital giants rather than from their parents’ bank (which is often theirs too). Why wouldn’t this apply to insurance as well?
Think about a health insurer who could warn you in the event that your health data is being handled by another, non-allowed party, or worse, has gone to the dark web. The tougher EU General Data Protection Regulation (GDPR) in 2018 is great, there is no denying, but could we, the consumers, have visibility as to how our own health data is being handled in real time? Can insurers produce such a trustable and transparent health data haven?
Rewarding the Good Insurers
Understanding insurers’ behaviours is key to providing a tailored set of policies and rewards if the consumer is classified as a lower-risk user. Wearables alone do not have a purpose, but if they are part of a process then they can become essentials.
Data and analytics help assess risk parameters. This applies not only to sports wearables but also to non-invasive medical sensors and other sources of monitoring or reporting. Whether it is about pre or post medical care, the healthcare industry or its financing partner, the insurance companies. We are moving towards multi-IOT connectivity, as long as (1) meaningful data is gathered, (2) data gathering is pursued as long as necessary to qualify and quantify an impact, and (3) rewards and incentives for consumers, employees or patients are meaningful and recurrent.
Companies such as Wellmo or Wefitter have understood this for some time, with reward wellness programs for consumers or employees, offered to either insurers or corporates or both. French company Umanlife also offers complete tailored wellness and health programmes for the whole family, where members help each other, with an offering that can be linked in with the insurance service providers.
In Germany, statutory insurances have already been offering bonus programmes to their members for years, to help tackle stress at work. The more courses the insured party completes, the more they benefit from policy premium discounts or even hard cash. On average, our German neighbours visit the doctor ten times per year (compared to 2.5 doctor visits per year in Finland) and insurers have contributed to putting in place a process to help decrease doctor visits. An individual’s personal contribution to health insurance can reach a whopping 2.5% from gross salary (and an additional, similar fee is paid by their employer), so there are economic impacts, but there is also evidence that investing in preventative care works. Back to our wearable data gathering/incentive scenario, the boundaries that used to separate preventative healthcare, healthcare, pharma and technologies, are falling away. Now, all we need is to link all these elements together, and APIs and AI can more than do the trick.
The API and AI Economy
“APIs are quickly becoming enablers of omni-channel selling and service business models. As Forbes wrote, 2017 is quickly becoming the Year of the API Economy, because companies urgently want to develop new business models.” Often, depending on legacy IT systems, insurers need to plug into the ever-changing ecosystems of the standard and non-standard world of wearables and medical devices.
Such activity requires the implementation of agile application interfaces that convert data to a format exploitable by the insurers’ back end systems. APIs help insurance companies quickly deploy a new set of services. Also, Security as a Service is expanding, plugging into existing systems.
The security company Chino.io guarantees strict compliance to GDPR with dedicated cloud solutions to plug into. With the tremendous amount of legacy and new, real-time user and patient data, artificial intelligence engines are a must-have.
According to CB Insights, “Corporate giants like Google, IBM, Yahoo, Intel, Apple and Salesforce are competing in the race to acquire private AI companies, with Ford, Samsung, GE and Uber emerging as new entrants. This quarter also saw one of the largest M&A deals: Ford’s acquisition of Argo AI for 1 billion dollars.” Those aren’t car manufacturers, they are data aggregators and interpreters – again, do not think products, think outcomes. From the sources. These applications include claims handling, pre-diagnosis, pre-drug prescriptions, and other forms of doctors’ assistance bots. Okay, the bots aren’t yet ready to simulate a proper deep human conversation, although NLP diagnoses are fairly advanced, but it is only a matter of time before bot-doctors treat us instead of us Googling our symptoms.
The dream Healthtech & Insurtech Ecosystem
Let’s be creative and simply ask what consumers really want from our insurers. A comprehensive lifetime offering of both preventative and healthcare services that will help us live until we are 120, tailored to us, the individuals, according to our behaviour, from when we are born until we die. A package that provides us with peace of mind, opportunities to participate in impact-based actions to help our communities, our colleagues, our employers, our family members or those close to us.
We also want smart and “wow” devices on the go to help us be healthier, less stressed, more focused and better individuals. Who wouldn’t want a flexible and on-demand health and insurance offering that understands human life cycles and its financial highs and lows? There is a real need for a service concept based on the customer journey, where we and not IT systems or uncommitted service agents are in the heart of the service delivery process. We want transparency on all our health and financial data and guarantees that they won’t fall into the wrong hands. No one wants to belong to a financial ecosystem that goes against our fundamental values.
Digitalising and insuring healthcare services is not about having that cool-looking new app or the latest hybrid watch. It is the implementation and maintenance of a lifetime ecosystem of interests and human concerns, valuable to all stakeholders, with the promise of a happy and long life at its heart.