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Product platforms reimagined

Moving beyond financial protection through health-centred design

When it comes to health, the insurance conversation with customers typically starts with financial outcomes – the “what-if” scenarios that as humans we try not to think about. Will my insurance cover me if I am injured on the way to work today, or have a stroke, or will a pre-existing condition ruin my holiday? And while outcomes are important considerations for both customers and insurers alike, what if instead, the conversation started with “why?”. What if the conversation started with helping customers understand their health risks and underlying causes to then answer the question of why a particular product or set of products is best suited to their needs?

Insurers and InsurTechs are increasingly adept at using data to gain important insights into customers’ needs and behaviours. Yet when it comes to health, insurance products (think life, health, accident and even travel insurance) are sold on financial outcomes rather than health needs.

In some markets (for example, health insurance in Australia) insurance products are often marketed as a way to lower income taxes.

It’s a very pragmatic approach to insurance, yet it’s one that is focused on outcomes within products (for example, mortality within a life insurance product) rather than across products (for example, life and travel products that reflect my health profile). This presents a potentially game-changing opportunity: insurance platforms that offer multiple products, options and services based on the customer’s health profile.

Data is the key to unlocking this type of value: Products such as life, health, accident and travel insurance all stem from a customer’s health and lifestyle. Yet beyond their use in determining eligibility and premiums, health and lifestyle are rarely given much consideration over the course of the customer relationship.

That’s ironic, given that insurers typically possess quite a lot of health-related data already:

  • Biometric data such as age, gender, height, weight, and likely BMI
  • Medical grade data from blood tests and other diagnostics captured during the underwriting process
  • Demographic information, such as ethnicity, profession, income level, and postal codes.

Collectively, this data provides the foundation of a platform through which insurers are able to predict a customer’s individual health risks, and deliver a combination of insurance products to that specific customer.

Consider this hypothetical case: a customer is discussing their life and health insurance needs with their insurance company. Reviewing the customer’s individual and demographic data, the insurer is able to determine the customer’s likely risk of developing diabetes or some other health issue over the next 12 to 24 months. This information allows the insurer and the customer to identify the type and level of coverage that’s most suitable and ensure that other policies (e.g. travel) also have appropriate add-on coverage.

But that’s not all, because the insurer could then use this information to help the customer understand their health risks and then point them to programs and services (such as chronic disease management or broader wellbeing programs) to mitigate or manage those risks. For example, if the data shows a customer has a 20 percent risk of experiencing diabetes, the insurer can alert them to this fact and provide them with connections to specialists, dieticians, physiotherapists and more to help them manage this potential health issue. Contrast this with today’s all-too-common focus on life insurance customer’s income and financial goals – where the emphasis is on what happens after the customer is incapacitated or deceased.

Using health – rather than finances – as the basis of the insurance conversation with customers, would allow insurers to be transparent about why they recommend certain coverages and more clearly explain the rationale behind insurance premiums. It’s a level of customer service far beyond, and far more meaningful, than say providing a neat UI or UX for easy policy applications.

Admittedly, achieving this vision does require insurers to overcome some challenges such as:

  • Connecting to a broader ecosystem to access the data required; potentially sharing claim-related data or insights with other parties
  • Gaining access to medical data that may be tucked away inside the practice management systems of doctors and hospitals – and subject to strict privacy and data protection laws
  • Determining the usefulness of biometric data captured by various smart devices (e.g. fitness bands, pulse trackers), which may not be of medical-grade quality and thus of limited use to insurers.

To overcome these challenges, insurers will need to form partnerships with a range of specialists, such as healthcare providers and wellness practitioners; InsurTechs and other technology firms and third-party data providers. Investments in analytics, AI and machine learning – and cybersecurity – will be essential. It will take time, but it is achievable

Where to begin? Here are some recommendations:

  • Look at your own data maturity. Undertake an ‘audit’ of the customer health and demographic data you already possess and collect. You may find you have sufficient data to try piloting a new, health-focused approach.
  • Understand your ecosystem. What organisations do you already partner with? Do you work already with wellness providers? General practitioners and other healthcare providers? InsurTechs? Each of these connections could be a valuable source of customer data.
  • Take a deeper look at your customer segments. Determine whether your business is weighted towards certain customer segments, for example maybe you’re a travel insurer deriving a lot of business from professionals in their 30s and 40s. This information could help you zero in on certain health concerns and needs common to your customers.
  • Think about how health data could reshape product offerings. Starting with the customer health data you have on hand, consider how you could capitalise on that data to create new, highly tailored products for your customers. Think about how you could develop more flexible, individualised pricing. And give thought to how these new products could be marketed to customers.

By capitalising on the wealth of health – related data available, insurers have a unique opportunity to provide customers with highly tailored insurance products, and value-added health counsel. That’s a good prescription for insurers and customers alike.

For more insights and developments in insurance and InsurTech, please visit KPMG.

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