Better matchmaking needed for insurance and digital health
Insurers should innovate across their value chains with more digital health mechanisms, from marketing and distribution to underwriting and claims processing, according to a recent report by the Geneva Association.
Insurance firms are likely to face significant business model disruptions from digitally powered health platforms, but they have been slow to digitize.
The digital health market will quadruple to nearly US$400 billion in 2025, according to a report by QY Research, spurred by improved access to affordable care, rising consumer expectations in a tech-enabled environment and efforts to control spiraling costs.
The effects of COVID-19 have accelerated the uptake of digital health, according to QY's report.
In Asia, funding for digital health doubled from US$808 million in the first quarter of 2020 to US$1,663 million in the second quarter, and China is leading the way with a sharp increase in tele-health.
Due to the different amount of informational held between the insurer and the policyholder, health and life insurers face the inherent challenge of adverse selection if the insured choose to hide some important personal information that is relevant to the contract. Digital health providers may help counter these challenges.
From a value chain perspective, carriers may use more targeted online marketing and distribution channels to attract previously untapped populations and create more balanced risk pools. Others may apply greater precision to underwriting using digital health data to provide transparent and adequate coverage to those more at risk of poor health.
While most insurers see digital health as an opportunity to tackle non-communicable diseases, only a few leverage it to influence premiums and underwriting.
To bridge the gap, the insurance industry can drive digital health toward impactful products and services through its purchasing power. Insurers can move away from their roles as reactive risk managers and simple claims payers to actively support managing their policyholders' health.
Underwriters can also unlock significant value by creating a digital health marketplace that combines relevant digital and in-person solutions, with outcomes, quality and affordability at its core.
Over the past 46 years, the Geneva Association has been a leading international think tank for the insurance industry.