Deloitte’s 2015 Life Sciences and Healthcare Outlook stated that global healthcare is “operating in an era of significant transformation”. Xuber’s Steve Westley (pictured) considers how this is simultaneously presenting international private medical insurance with huge opportunities and major challenges.
Health insurance markets around the globe are undoubtedly experiencing fundamental changes. Customer expectations and behaviour have radically changed with ubiquitous internet and mobile adoption; new health economies are arising in unchartered territories servicing growing middle class populations; advances in treatment and technology are revolutionising healthcare provision; in the UK, the private sector is poised to fill gaps emerging from core state provision as a rising and aging population, and more chronic and lifestyle diseases place pressure on public sector provision already struggling with government spending cut-backs.
It’s clear that this transformation offers fantastic opportunities for health insurance companies but some will find themselves unprepared to take advantage.
One of the greatest drivers of change in the insurance industry is the consumerisation of technology. The “smartphone effect” has meant that everyone – from customers to partners to employees – demands access to information anytime, anywhere, on any device. The internet and mobile technology has empowered the customer and providing businesses with increased opportunities to connect with them.
The current boom in wearable technology is evidence of a growing desire among consumers to monitor and control their health and health information. The popularity of gadgets such as the FitBit and Jawbone UP, and the release of the health kits that both Apple and Google included in their recent mobile operating system updates, is part of a wave of innovation that is set to continue through the year. Insurers can take advantage of this by integrating wearable technologies with insurance policies to provide usage based premiums. Rewarding customers for (documented) healthier living means potentially fewer claims, a more connected client and a source of usable data.
But insurance companies have been slow to adapt, while businesses born out of the mobile and digital industries have the understanding of mobile technology and social media, not to mention the power of big data, to pose a serious competitive threat to traditional health insurance providers. How to interpret and use the reams of data generated by this new technology-enabled health care world, while maintaining its integrity and confidentiality, depends on the capability of the software underpinning the organisation. Health insurers have to get in on this game, whether it be by modernisation, acquisition or partnerships. Those running on outdated, legacy systems and infrastructure cannot compete with these digital age businesses that can deploy more agile processes and respond quickly to market opportunities.
Technology and multiple distribution channels have made customers around the world more accessible and the opportunity to expand into new territories is greater now than ever before. Emerging economies – notably India, China and Latin America – are set to represent a significant part of the global economy with wealthier communities and increasing numbers of expatriates, high net worth individuals and frequent business travellers.
This opportunity is tempered by the complexities of conducting business in developing countries, many of which lack infrastructure. Regulatory reforms in some countries have opened doors for insurance but domestic providers have tended to fare better and some new markets may even start to insist that local businesses are prioritised.
Making it work requires an enterprise-wide IT system comprising administration and claims in one multi-currency database allowing financial consolidation and depth of reporting. Insurance firms need to demonstrate that they have active and comprehensive compliance programs across their business operations and throughout their supply chain. The ability to launch a relevant policy or product at the right time is a real advantage in building a significant presence in a new market and demands agile technology. For the customer, fast service and a quick, simple claims process and instant access to plan documents and claims tracking information is very appealing.
While necessary for growth, reaching in to new territories is not a fast route to profitability. To be frank, international private medical insurance businesses will have their work cut out to present shareholders with an impressive bottom line this year. The health insurance world faces an unsustainable situation where global healthcare costs are rising, forcing increased premiums which outstrip inflation and wage increases. But insurers have to provide affordable options to customers without turning insurance into a commodity where providers are selected purely on price. How to strike a balance?
2015 is about adapting to the new world order, gaining market share by developing relevant products for new markets and building customer relationships by delivering superior services and communication. Businesses must develop efficient strategies for improving distribution, operations and product development. Shareholders must be convinced that while transformation, expansion, operational changes and technological upgrades and innovations may increase overall costs, they are necessary for survival.
Success for businesses in this sector over the rest of the year will depend on their ability to confront the challenges and embrace change, and this cannot be achieved without agile technology that puts the customer at its heart.
Steve Westley is director of health services at Xuber