Some international best practices have emerged in the usage of IoT in the health insurance business over the past few years. And there are more to come – of the most intriguing of which is the “insurance digital twin”.
Futurologists and insurance professionals focused on innovation used to love to talk about disruption and hunting black swans. Nowadays they predict a “new normal” arising from Covid-19 that fits with their hopes. Each of them is designing a future based on their own self-image.
I’ve dedicated my activity in the insurance sector to innovation, but I’ve never found myself aligned with the “disruption” buzzword or utopian scenario crowd. Instead, I’ve always concentrated on innovations driven by business needs. My focus has been insurance fundamentals, and the study of the expected impacts of insurtech solutions on these fundamentals.
I’ve been lucky enough to advise more than 100 companies in 20 different countries about insurance innovation over the last eight years. I’ve seen relevant changes happen in these insurance markets over this period. However, it’s clear that nothing happens overnight in this sector, so some futurologists’ predictions are basically wishful thinking. On the stages of 2019 international insurance conferences, I’ve enjoyed playing with the old predictions for 2020 regarding the numbers of telematic auto insurance policies, the weight of digital channels on insurance distribution, and the shrinkage of the auto insurance business due to autonomous cars.
A few months ago, I had the opportunity to receive an appraisal of some of my old advice about innovation in the health insurance business. I had a workshop with one of the members of the IoT Insurance Observatory, the think tank I founded to support European and North American insurers in their journey to innovate in different insurance business lines using IoT data. Within the team present at this meeting, there were two senior executives who, in 2012 and 2013, had leadership positions in organisations I advised on health insurance at that time.
While presenting different opportunities during this meeting to develop their health insurance business, it was extremely interesting to debate success stories and failures from international health insurance markets. I had the unique opportunity to review with the same people the advice I gave them seven years previously.
The vision that guides my thinking about IoT roles in health insurance innovation has matured, but the fundamentals are consistent with my old thoughts. However, the most interesting part was the deep discussion of each IoT-based use-case and the parallels with the old advice given seven years ago.
My old advice was articulated in seven areas of opportunity, and all of them were ambitious innovations at that time. After all these years, one of those areas is no longer on my shortlist, but the other six are clear opportunities to create value in core health insurance processes.
So what are these confirmed opportunities? Promotion of healthy behaviors (leveraging wearables and third-party data), and mobile-based remote consultation (through chat/video/call) with doctors are both approaches adopted by many health insurers in different international markets. The level of maturity of these use cases is pretty high, and there is clear evidence of which approaches are more effective. Three other confirmed areas of opportunity to adopt IoT are early detection, care optimisation, and medication adherence. These opportunities along the patient journey show a low level of maturity, but some international pioneers have integrated these aspects into their core processes as well as multiple active pilots carried out by others. Finally, the usage of IoT data for precise underwriting before the quotation seems to be the less mature of my old use-cases. We have seen some best practices around continuous underwriting, but fewer on the usage of IoT-based scores for first quotations.
What’s next for IoT in the health insurance sector? In that meeting, we discussed some other more innovative use-cases, which have been rationalised by the IoT Insurance Observatory but have not yet been explored by any insurers around the world. From my point of view, they will represent the next innovation frontier. One of these IoT-based use cases is the “insurance digital twin”. In a nutshell, it is a digital replica of the life of the customer that will allow exploitation of the full potential of available data on the different insurer functions, and potentially cross-business lines.
To find out more about the IoT Insurance Observatory research please visit www.iotinsobs.com
by Matteo Carbone