The changing face of health insurance in India
The health insurance industry in India, while growing rapidly offers very rudimentary products even today. It is still dominated by basic indemnity-based reimbursement for hospitalization products. It is extremely odd that doctors over engage with the patients even when the intervention does not require more than two hours and at times even advise the patient to spend the night at the hospital. Surely this has happened with many of us. This is driven by the nature of health insurance products in India, wherein most products do not cover OPD or out patient department treatment, only hospitalization.
With data explosion, digitalisation and the emergence of the Internet of things (IoT), primarily the connected human, nowhere in the world are the prospects of integrating technology and data higher than in the Indian health insurance sector, with a large transformation opportunity presented by a largely underinsured population, increasing health consciousness, and the availability of data and digital advancements.
Insurers and insure-techs are innovating rapidly to change the way you will buy health insurance. Imagine that instead of going for a traditional medical check-up, insurers will be able to underwrite your risks basis the data from your wearables or by reading your facial expressions through a video chat or may be through data from a microchip in your tooth brush. For example, Lufax, a successful fintech in China, has already started using facial expressions on video calls to assess credit risk. It is not a stretch to see the same being implemented for risk underwriting in the near future. The market for digital health solutions has witnessed explosive growth in recent times with each one being even more sophisticated than the last.
Insurance companies will be able to leverage data and digital solutions to engage more with their customers, moving away from simple products to solutions, and from being just a payer to a partner. This will include health insurers leveraging data analytics and partnerships to encourage customers to eat healthy, exercise appropriately, and perform regular check-ups by nudging their customers at the right time. Insurers will be able to provide customers with more nuanced and efficient customer experience from being able to help customers when it matters the most at the time of illness to even helping customers take care of their health rather than just settle their claims. For example, Clover, a US-based health insurance start-up, tracks 46 different clinical and social data points to help customers avoid hospital visits by using sophisticated data analytics and a software model built by using health and risk factors of its customers. The company employs the data and conducts home visits to coordinate care, whether it’s helping a customer with a prescription refill, reminding about health vitals or arranging a ride to a medical appointment. They are using data and technology to improve health outcomes of their customers.
Among all the changes, the most important change for the consumer will be the availability of a wider range of health insurance products. There is increasing demand from consumers for specific products to cover certain specific illnesses or for certain specific features depending on the experience and what they have seen around. Digital solutions and more data will enable health insurers to be more innovative in product design and be able to provide customized products to meet customer needs. The last few years have seen insurance companies going beyond traditional indemnity-based products and coming out with new products such as critical illness, wellness management, cancer care, overseas travel etc. to meet customer needs. Several gaps still exist however, in being able to provide the required coverage, for example to provide coverage as per health and wellness behaviour of the customer, location, dental, OPD coverage etc. Health insurers and consumers will be able to align their interests if the coverage becomes more customized and pricing is as per the coverage. For example, if you are a healthy individual and are willing to sign up for very high co-pay/deductibles, then the insurance company will be able to price your health cover attractively. Obviously, this works well only for genuine customers and not for those intending to commit fraud.
The future is all about data. Digital technology is evolving rapidly and becoming so affordable that insurers will figure out different ways to innovate and engage with their customers. Take for example the recent launch of the “JD Running Chicken” project in Hebei province of China by JD.com, a Chinese e-commerce giant. The project envisages each chicken wearing a foot ring to monitor how many steps it runs daily, more the steps, more healthy the chicken and higher the price it sells for. Evidently, the chickens are going digital native, with their own fitness bands, although not of their own volition. Are we as consumers ready to adopt wearables and new health solutions to embrace the new world of digital health?
Alpesh Shah is a senior partner and director, and leads the APAC insurance practice for the Boston Consulting Group (BCG). Ajit Rochlani is a consultant at BCG. This is the final part of a three-part series focused on the changing face of Indian insurance sector. All views are personal.