The threat of Amazon, Ali Baba and Alphabet was uppermost in the minds of healthcare insurers at Uniglobal 10th Global Health Insurance Conference. Their response is to build partnerships, particularly in telehealth and wellness apps.
Insurers said they are now focused on building a strong customer relationship. But the main goal has been to cut costs, as medical inflation wipes out demand and margin.
“I can guarantee that in seven to eight years at least two-thirds of you won’t be here, and that 30-40% of companies now present won’t be operating in the market”, said Ron Buchan, now a non-exec director of Alllianz Partners, adding: “I’m alright because I have retired.”
Shape up or ship out was the message. Buchan and others echoed the view that everything in insurance is about to change. “The big barrier for entry for three centuries has been money,” said Buchan. “But we all know how wealthy the tech stocks are.” He added: “The focus of expertise has moved from insurance-related assessments of risk to the application of technology in our businesses and how we interact with the public.”
Delegates at the event expressed surprise that insurers were not further down the path to using artificial intelligence and digital health. Insurers want to get closer to their customers but there was general agreement that most apps designed to create loyalty and a relationship with customers were lucky if they enjoyed a 1% retention rate (which we will look at in more detail next week).
In practice, the solution followed by Allianz and Axa is to partner with telehealth providers and genetic digital healthcare platforms such as Dacado.
Insurers are genuinely aware that they need to focus on customer needs and they are developing wellness and prevention offerings to increase the stickiness of corporates.
But the market is getting squeezed. Take the UK. Individuals with individual, high margin PMI policies are quitting because of cost. Meanwhile, cost-conscious corporate coverage is increasing. The total number of covered remains the same, but we were told that insurers were lucky to get a 1% margin on corporate business.
Meanwhile, there is a Berlin Wall between insurers and health care service providers. The two sides are not talking at all and regard each other with great distrust. It strikes us that this will need to change.We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.