A few recent developments in health insurance are noteworthy. Two of these were sizeable fund raises, distinctive from general trends. The third saw a large insurer unveil its ecosystem roadmap.
The events in discussion are:
- Oscar Insurance raised $225 million recently, $1.5 billion till date.
- Waterdrop raised $230 million from Swiss Re and Tencent. It was Swiss Re’s first startup investment in China.
- Ping An released its health ecosystem roadmap with plans to create synergies with core financial businesses to acquire customers, enhance stickiness and increase CLTV.
Notable 2020 achievements:
- Oscar’s insurance customers were most active telemedicine users among all US providers. Around 30% of patients with Oscar’s insurance plans used telemedicine, against 10% nationwide.
- Waterdrop‘s Insurance Mall with 120 million enrollees wrote premium of US$865 million in Jan-Jun 2020, close to FY2019 annual written premium. The new funding is being used to grow digital platform users and expand partnerships with pharma companies, hospitals, pharmacies and clinical care facilities.
- 15% – 20% of Ping An‘s new financial customers were acquired from the healthcare ecosystem. Contracts per financial customer that used healthcare ecosystem services was 3.1 versus 2.0 for non-users. Digital health platforms for intelligent diagnosis assistance and chronic disease management have facilitated growth and outreach.
Over the past decade, health insurance has seen unprecedented growth. While US has the largest share, emerging markets saw 20% annual growth. Still, 400 million people lack access to essential health services, mostly in Africa and South Asia. The key trends driving growth are ageing populations, robust health infrastructure and rising incomes.
We are headed towards a dramatic transformation in healthcare, arising from two tectonic shifts: a) the need to reign in runaway cost inflation, which is triggering innovation in incentives and payment structures, and b) digital health, which is democratizing data and empowering consumers.
Payers, which include health insurers and government agencies, are perceived as critical drivers in this transformation. As they hold the purse strings, a domino effect is triggered on business models of others in the space. For instance, payers’ initiatives to reshape economic incentives has driven providers to reorient business models to outcomes-focused metrics and empower patients with digital health aids.
Digital health uses data and technology to treat patients, educate healthcare professionals, track diseases, monitor health and influence healthier lifestyles through prevention. Some of the key trends include:
- Data proliferation via sensors (examples in below figure).
- Decentralization of care delivery
- Digital therapeutics
These developments present a unique opportunity for insurers and their partners to ride the next wave in healthcare innovation.
Current underwriting practices rely on single point-in-time risk assessments. There is scant knowledge available on policyholder health subsequently. Utilizing digital health platforms, insurers leverage behavioral psychology and offer customers personalized wellness programs linked to a system of rewards and recognition and in the process, build insights on policyholder health.
South African health insurer Discovery is one such example, having made great strides through its Shared Value Insurance business model. The carrier has partnered with leading insurance groups around the world, each of which incorporates its Vitality platform into their business model.
Another recent example is smart-tech enabled platform GOQii that launched connected health hardware (ECG equipped smart watch, treadmill and weighing scale) with insurance cover. Partnering with Bajaj Allianz GI, the two offer users healthcare with benefits tied to preventive health metrics.
Wellness platforms with associated devices are becoming key mechanisms for data exchange between consumers and providers. For better health outcomes, these present a fuller picture by combining user health and fitness data with official records from health professionals and minimize health risks. Insurers who align themselves and offer personalized health delivery through partners and platforms can unlock untapped value and deliver differentiated customer experiences.
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