InsurTech is transforming the health insurance industry, by offering new ways to improve efficiency, customer experience, and profitability. However, InsurTech also comes with its own challenges and risks, that health insurers need to be aware of and address.
Some of the benefits that InsurTech can bring to health insurers are:
– Customized and flexible products: InsurTech allows health insurers to tailor their products to the specific needs and preferences of their customers, by rewarding them for reducing risk. For example, health insurers can use telematics to track driving behavior, or vitality programs to encourage healthier lifestyle habits. This can help health insurers lower their claims and costs, as well as attract and keep more customers.
– Smarter pricing and underwriting: InsurTech enables health insurers to use machine learning models and external data sources to better understand the potential value and price sensitivity of different customer segments, and to adjust their premiums and coverage accordingly. This can help health insurers improve their risk evaluation and pricing accuracy, as well as boost their market share and profitability.
– Seamless and convenient customer experience: InsurTech makes it easier and faster for customers to compare, buy, and claim health insurance, across multiple channels and devices. InsurTech also helps health insurers provide more clear and engaging communication, as well as additional services, such as health advice, wellness programs, or telemedicine. This can help health insurers increase customer satisfaction, loyalty, and retention, as well as cross-sell and up-sell opportunities.
Some of the challenges and risks that InsurTech can pose to health insurers are:
– Privacy, security, and ethical issues: InsurTech involves handling large amounts of personal and sensitive data, such as health records, biometric data, or location data. This raises concerns about privacy, security, and ethics, as well as legal and regulatory issues, especially in different countries and markets. Health insurers need to comply with the relevant laws and regulations, as well as protect the data and rights of their customers and partners, to avoid legal troubles and reputation losses.
– Competition and disruption: InsurTech creates a more dynamic and competitive environment, where health insurers face not only traditional competitors, but also new players, such as tech giants, digital platforms, or insurtech startups. These new players may have advantages in terms of innovation, customer reach, or cost efficiency, and may offer alternative or better solutions to the customers. Health insurers need to keep up with the changing customer needs and preferences, as well as innovate and differentiate themselves, to maintain and grow their market position and value proposition.
– Cost, complexity, and uncertainty: InsurTech requires health insurers to invest in and adopt new technologies, systems, and processes, which may involve significant costs, complexities, and uncertainties. Health insurers may also encounter operational and technical risks, such as system failures, cyberattacks, or human errors, that may affect their performance, reliability, or security. Health insurers need to ensure that they have the necessary capabilities, resources, and governance, to manage and mitigate these risks, as well as to ensure the quality and continuity of their services.
