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The new landscape for health insurers

Source: Asia Insurance Review | Aug 2018

Global Life & Health

Wellness not illness. Partnerships not patients. Changing societal trends are disrupting an age-old industry and health insurers are providing an ever-broadening array of services that sets them apart from other parts of the insurance industry.
By Ridwan Abbas
Insurers have long struggled to differentiate their products and services from one another, with customers often viewing their purchase as a commodity. In a highly competitive marketplace, price is a big driver when choosing an insurance policy – especially so for non-life products. 
The industry is trying to change this by embracing digital platforms and offering customers an array of services beyond the core insurance in order to differentiate themselves, and in the process build customer loyalty. 
Nowhere is this battle for differentiation being fought more keenly in insurance than in the health space, where advances in technology, modern approaches to healthcare and a more empowered consumer with access to information, are some of the push factors in transforming health insurers from being just a third-party ‘payer’ into a more holistic health partner. 
“Our research has identified that customers want a long-term relationship with their insurer, who they can trust to support their health, be flexible with their evolving needs and be by their side,” said Metlife head of health in Asia Joyce Au-Yeung. “Health offers huge potential to establish this kind of relationship with customers throughout their lifespan.” 
Becoming more relevant
In an era when consumers expect high-touch and personalised service, and where insurance has traditionally been a low-touch industry, the opportunity for increased engagement is one which health insurers are eager to grasp. 
Ms Au-Yeung believes it has altered their approach, with insurers having to become more responsive in order to create a more frictionless process and greater personalisation. 
“Customer experience has become the primary focus for differentiation. We’ve become more accustomed to what ‘good’ looks like and our expectations for how we interact with service providers are higher than ever,” she said. 
Aside from providing a greater customer experience, the need to provide a more holistic health and wellness offering also stems from the fact that insurers are keen to curb the steady rise of chronic diseases worldwide. 
So in a practical sense, prevention is certainly better, and more sustainable, than cure.
“Traditional health systems and corresponding insurance benefits were designed to deliver diagnosis and treatment of acute or episodic health conditions. With the proliferation of more chronic disorders, this model is not sustainable,” said RGA head of health for Southeast Asia Emma Wilkins. 
Partnerships and value-added services
Hence, providing for the wellness of customers rather than just funding the cost of medical conditions has become an avenue for health providers increasingly to differentiate themselves from their peers. 
The services being provided range from health assessment and tracking, active health improvement services such as smoking cessation plans and gym membership subsidies, wellness programmes that rewards customers for living healthily, genomics testing that predict the risk of developing certain diseases, video consultations with doctors and easy access to medical specialists. 
These are just some of the incentives that health insurers are starting to offer in their efforts to become an active health partner to the customer. 
“We see an increased trend towards partnership. Most will rely on independent expert providers who they know will be able to deliver the right service for their customers, wherever and whenever they need it. 
“It is more about providing a ‘curated’ experience, less about providing the services themselves,” said AXA global head of health reinsurance partnerships Laurent Pochat-Cottilloux. 
Developing solutions 
While partnerships are certainly in vogue, the industry is also actively designing its own solutions by way of new products and reimbursement plans that better address the needs of customers. 
“At RGA we have made great progress in developing relevant products. These include innovations in cancer and critical illness reimbursement plans, which resonate with consumers’ greatest concerns, as well as inclusive insurance products extending cover to the increasing diabetic population,” said Ms Wilkins. 
Meanwhile, Swiss Re recently co-developed a diabetes disease management solution with Muang Thai Life and partners in Thailand, which is a dynamic pricing product designed to adjust the premium level as the customer’s health condition improves.
“Shorter term and more dynamic health products that reflect consumers’ changing health stages and needs are another growth area. They are particularly promising in the areas of chronic conditions such as diabetes where risk factors are modifiable with behaviour change and actions,” said Swiss Re head of health and medical solutions in Asia Sohila Kwan. 
“In terms of insurance product innovation, the opportunity is to focus on more sustainable and future-proof product designs and definitions as well as benefits that are personalised and evolve with the customer’s health,” she added. 
Towards greater personalisation
The growing prevalence of digital health solutions, and the ability to record and interpret data, will inevitably reshape the health insurance market. 
“I expect the Internet of Things to mean increased access to connected healthcare devices, themselves linked to mobile apps, and some ultimately one day impacting the premiums paid by customers for their health insurance,” said Mr Pochat-Cottilloux.
He added that it was plausible to envisage someone tracking their cholesterol or insulin level and receiving a discount on their premium based on their personal readings. 
“This is similar to what is happening in motor insurance, where ‘pay as you drive’ products are used to reward good drivers by tracking their behaviour on the road. In health insurance terms, this would be ‘pay as you live’,” he said. 
Ms Au-Yeung also believes that a needs-driven product development model is the way forward for health insurance. “Most people find insurance categories like critical illness and income protection confusing and difficult to navigate – but imagine if you could buy a singular ‘pay-as-your-live’ product to fit your every lifestyle and life-stage need.
“This is no longer beyond the realms of possibility, but we need to accelerate our thinking and risk appetite in order to get there,” she said. 
Future outlook
Health insurers would certainly be tracking new developments in healthcare with great interest as it affects the sustainability of their products. This is especially so in Asia where many products are on guaranteed long-term durations, said Ms Kwan. 
Unlike other sectors, innovation in healthcare leads to higher rather than reduced cost. Hence while medical advances will drive health insurance forward, it will also continue to drive premium increases as the cost of medical treatments continue to rise. 
In that regard, insurers will have more than enough motivation to stay on the prevention and wellness path. It would also mean that co-payments, deductibles, restricted hospital networks and remote medical care will become an even bigger feature moving forward. 
Mr Pochat-Cottilloux anticipates that as the healthcare system in Asia matures, insurance coverage will be more focused on the most critical areas in order to keep cost in check. 
“The insurance component of the product needs to be increasingly focused on what the customer needs the most in order to keep the product affordable. For example, outpatient consultations may no longer be insured, but hospital stays will,” he said. 
But while coverage may become less expansive, the breadth and sophistication of health-related services that insurers provide will continue to grow in the foreseeable future. A 
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