Creating next generation health insurance
With people wanting to stay healthier for longer, society is demanding that health insurers play their part in this effort. Customers expect their insurer to collaborate with them in staying healthy, addressing their medical needs in new ways, and engaging them using a variety of new channels. This gives health insurers an opportunity to devise novel, preventative products and services made available through modern technologies to become a healthcare partner to their customers.
The prize is worth it. Helping customers make positive life choices to prevent long-term, chronic illness offers insurers a substantial opportunity to grow and diversify their customer base to improve underwriting profit whilst also reduce operating costs as customers transition to digital channels. All of which will have a positive impact on an insurer’s combined operating ratio whilst mitigating the risk of disruption through new market entrants and disintermediation.
In creating next generation health insurance, insurers will need to challenge themselves to re-imagine how they engage customers from the beginning to the end of the product lifecycle, how they contend with the challenge from digital disruptors and how they create an end-to-end digital and agile operating model that enables them to deliver relevant products to market faster. We refer to this paradigm as organisational agility.
Some research carried out by PA Consulting shows that there are 5 key characteristics of insurers who have successfully created end-to-end digital and agile operating models. These insurers:
- Centre on their customers: By bringing customers into the new product and service development process (e.g. personalised product pricing and coverage terms or new customer acquisition or service channels) they can harvest and respond to customer feedback in a direct and inclusive way. Customer centricity makes it much easier to trial new innovations and prove their value, pivoting ruthlessly away from products and services customers do not want.
- Focus on speeding up time to value: Simple measures, like lead time to market ensures focus on simplifying processes which get in the way of speed in delivery. Breaking work down into smaller achievable parts helps people focus on what is most urgent and important so they can deliver quick and simple solutions which meet customers’ needs and can then be enhanced in an iterative and incremental way.
- Design for simplicity: Align people, process and technology around the value the insurer delivers through virtual long lived delivery teams, not around what employees do within specific functions (e.g. distribution, marketing or technology).
- Build to evolve: They recognise that a learning based, evolutionary insurer is the key to success. They create an environment where people work in alert, responsive and dynamic teams, able to adapt to changing competitor activity and customer needs, whilst also learning from their own internal data points.
- Liberate their people: They offer a clear and inspiring sense of purpose to create a sense of inclusion and commitment. They publicly recognise and reward people who step outside their organisational boundaries to collaborate with others to get the job done, making them the leaders of tomorrow.
Achieving maturity in these characteristics takes time; organisational agility is a journey not a destination. Leaders must start by building unanimous top team commitment, so they are in collective agreement as to why they want to change in a unanimous, unshakeable, and tangible way. They must then create the conditions of success from the outset. Ensuring your company has the right culture of curiosity for agility to blossom, lining up supporters and determining how you are going to measure and communicate progress is key. Without these factors success will be unachievable.
Meeting the needs of today's society
Creating organisational agility touches many functions and internal capabilities. There will be times when making design compromises seems like the right thing to do in the interests of speed of change, compromising with colleagues on the extent of the re-design and its corresponding operating model. However, this can often result in watering down critical elements which leads to fragmentation and inefficiency. Finally, accepting that tomorrow’s leaders will be different to today’s will help break down traditional habits and fiefdoms and embrace bright pioneers of your future success. These will be the leaders to evolve your business to create the next generation of health insurance.
There are some insurers who have embraced organisational agility that have seen the benefits, firsthand. For example, a leading global health insurer identified that its customers wanted preventative healthcare, wellbeing and health management. It set out an end-to-end digital and agile operating model, which considered 4 key lenses – customer experience, technology, delivery and operations. This is helping them to deliver a £25m per annum net profit uplift.
Insurers who recognise organisational agility as a keystone to creating next generation health insurance will achieve two outcomes. Firstly, they will more rapidly put valuable products and services in the hands of their customers. Secondly, they will evolve their business to be simpler and more effective, and be able to rapidly meet the changing needs of their customers and society.