From reaction to prevention – rethinking the role of UK health insurance
Health services globally are struggling to meet patient’s needs as they recover from the impact of COVID-19. They also face the spiralling cost of healthcare, predicted to rise at a real terms rate of two-to-three percent per annum above an already high inflation rate.
Faced with this backdrop, health insurers find themselves in a challenging commercial situation. Despite robust commercial performance in the first half of 2022, our cost-of-living research found 23 percent of the UK public are looking to cut back on private health coverage.
But, what if we could turn health insurance on its head? What if we focused on keeping people living strong, healthy, happy lives, instead of focusing on helping people once they’re already unwell? Our recent global research into the move from clinic and hospital-based care to home environments uncovered that by 2030, 96 percent of global healthcare providers believe people will be so focused on preventative care that most hospital visits will be unnecessary.
The opportunity to transform healthcare is huge. Between 55-65 percent of a typical health insurer’s claims costs can be impacted by preventative or mitigative actions. From chronic conditions to cancers, diabetes, and mental health – there are so many possibilities to prevent people from becoming unwell.
Solutions are at hand. We have the knowledge and technology to leave traditional, reactive, ‘sick care’ models of insurance behind. However, no single insurer has yet placed a fully preventative vision in their business model – first actor advantage remains for the insurer best able to capitalise.
Preventatives model of healthcare – opportunities for insurers
What does a preventative model of healthcare and insurance look like in practice? Prevention starts long before we suffer any symptoms. It begins with making good lifestyle choices, managing diets, nutrition, fitness, and mental health; it also requires a focus on screening and mitigation of those chronic conditions that impact people’s health the most.
Customers are ready. Our research into the health insurance market has found over 60 percent of customers want more control over their health, their wellbeing, and their insurance products – but less than 20 percent feel they get it from insurers today.
This presents a variety of options for insurers, including:
- Wellbeing and nutrition: Insurers have the data to curate, present, and match the most applicable insurance policy to an individual – while offering tax incentives to living well
- Mental health provision: Insurers can predict the relative risk of mental health concerns per individual and engage them in ways that drive take up
- Predictive analytics and connected devices: Many conditions can be managed, monitored, and mitigated via relatively simple analytics – from diabetes to renal and heart conditions, high blood pressure, and many others
- Genomics and personalised screening: Pre-dispositions to many chronic conditions can be detected via analysis of our DNA.
These are just a few of the options available to UK insurers, many of which are available to customers already via the broader healthcare ecosystem. The challenge now is not in devising the technology, it’s in creating modular value propositions, commercialising them, and taking the appropriate position in the marketplace – via appropriate partnering and rapid product development.
Think big, act fast
Delivering a preventative model requires insurers to rethink their businesses in fundamental ways. Insurers are built to be reactive and many lack the capabilities required to move to preventative models. From pricing to partnering, branding to business models, the transformation needs ambition, drive, and vision from leadership.
But first, insurers need to refocus their businesses to new, core capabilities to tackle some important elements:
1. Build a personalised view of the customer
Prevention requires the ability to predict and model health outcomes based on the huge amount of data available – on an individualised basis. This can range from simple demographic data to segment those at risk of cancers and other chronic conditions, right down to activity data highlighting trigger points linked to heart activity, blood pressure, mobility, and many others – all required to enable a personalised preventative model.
2. Explore new revenue models
Monetising preventative models requires moving away from typical, actuarial-based pricing models – often a blocker to moving to new approaches. This requires insurers to define, model, and market new revenue and business models – from subscriptions to wellness products, to one-off fees for testing and screening to data sharing, ecosystem, or platform revenue models – to fully capitalise on prevention.
3. Make the economic and social case
Insurers need to cater for retail customers focused on their health, but also corporate buyers whose incentives include reducing sick leave, increasing productivity, and improving the employee value proposition. Any preventive proposition should make a case not just based on health outcomes, but also a commercial basis for corporate customers.
4. Invest in partnerships
Insurers don’t need to do everything themselves. The MedTech and InsurTech market offers the ability to plug in new and exciting capabilities at speed. Insurers should reflect on their role – from an ‘orchestrator’, connecting and bundling third party suppliers, all the way through to a ‘builder’ of new offerings from the ground up. This will shape the preventative model for each insurer’s market position.
The need for a fully preventative model for healthcare is growing and insurers are already taking action. There is a tremendous first actor advantage for an insurer to move fast, seize the market opportunity and make a step change in revenue and profitability – potentially capturing a generation of customers into older age. If we stay healthy, everyone benefits.
Big Tech is moving to disrupt the market – because they have these core capabilities in place. They have the data and know how to act on it in a personalised, targeted way.
Soon, it will be as true as the saying – an apple a day, may very well keep the doctor away.