Health and insurance have existed in separate worlds with different goals. Users, consumer brands and disruptive tech are mashing them together in new and disruptive ways.
Siloes. Verticals. Established Industry categories.
Digital disruption has a delightful habit of tunnelling right the way through them, exposing their odd and often costly ways of doing business to the light of day. That’s what’s going on now in the health and insurance businesses. Both are being rewired by the same digital forces which have changed the face of media, retail and travel already.
Upstart has been working with clients in digital health for five years. Affordable, personal digital sensors in phones, wearables and homes are generating health-related data at an unprecedented rate. This is moving consumers’ ownership of their health from professionals and systems back to themselves, helped by the application of analytics and data.
At the same time, insurance, as a sub-sector of financial services, is also being changed beyond recognition. Hundreds of insurtech startups and scaleups are challenging the previously closed and protected worlds of managing risk.
Previously, both worlds have only overlapped in the areas of health and life insurance. As managers of risk, an insurer would seek to manage that risk, or at least use pricing incentives to limit their exposure. Health and demographic data can help to assess and limit that risk by “rating” smokers or those in hazardous professions.
Yet in the pre-digital age, insurers have been taking on risk by segmenting and stratifying it using rather blunt instruments - medical and family history and risk profiles of cohorts, zoning down as far as possible, but targeting a demographic segment always meant a large element of “buying blind.”
The granularity which digital brings is enabling new business models.
Both healthtech and consumer tech (Apple, Samsung and Fitbit) have already convinced customers to generate and share their movement data in exchange for personal gain. This can be as simple as personalised step counts or as sophisticated as services such as Sweatcoin or Betterpoints where financial rewards are earned through physical activity.
In the US, health insurance has disrupted the industry by with companies starting with a digitally-native, data-driven model rather than one which perpetuated the legacy model. In automotive insurance, the UK’s Aviva has pioneered the use of real-time data with it’s Aviva Drive app, offering real-time discounts for safer, more responsible driving. Insurtech startup Wrisk is also empowering customers for home contents insurance to use their data to achieve better discounts, much like US pioneer Lemonade.
There are already precedents for customers sharing data with insurers or intermediaries for incentives (financial, societal or social). Given that health in most developed markets is funded through private payers, it is only a matter of time before these new business models will become a reality.
So Now What?
As industries, health and insurance have always had an uneasy relationship - insurers wanting to manage and control costs, and health wanting the best outcome for the patient.
Future business models can and will involve the customer (aka patient, user), their data and their voice. They will also bring with them the sensitive and difficult tasks of managing ethics and privacy.
Whether you’re in health, insurance or in a sector such as professional services now on the cusp of digital disruption, you can do the following:
Understand - Learn from experience. Take five minutes to understand how health and insurance are being mashed together using customer data
Think - what the similarities are between your industry and these two.
Plan - anticipate what partnerships you may need to strike which can create new business models which work in the customer’s favour.