Library: Embedded Health – The next growth frontier for insurance

June 2022 featured report:

No doubt, you’re familiar with the term embedded insurance (EI). Not only has it arrived, but it seems to be everywhere and is proliferating rapidly.

Insurers have realised less than 10% of the potential value of embedded health

The future is embedded

EI may have grown out of simple protection products and extended warranties for consumer products, it is rapidly extending into the auto market. Commentators also believe it will have a major role in developing the digital presence of insurance into health and even life cover. 

Many see EI as a solution to addressing the protection gap by placing highly tailored, affordable cover literally at the consumers fingertips. 

This paper from Alchemy Crew, Sona and CareVoice looks to set down markers for what EI in the health market is today and where it could go in the future. 

A changing landscape

If COVID-19 showed us nothing else, it is that it doesn’t take much to stretch healthcare systems in developed markets to breaking point. 

People want access to a faster and – wherever possible – frictionless health service. Not only do they want access to health, but they want it on their own terms. They are also increasingly comfortable accessing it via digital means. 

Innovations from major players including Ping An and AXA, plus the integration of health care cover with lifestyle choices from the likes of Vitality have changed the health landscape. But it’s early days and there is no hard and fast idea as to what embedded health could look like in the future. 

This report, like every other, emphasises the need for insurers to get with the program if they don’t want to get displaced by digital first players. 

Digital proved itself during the COVID 19 pandemic when traditional health services were stretched or simply unavailable. Digital and phone based interaction became commonplace and this paper identifies four key themes for delivering better health services. 

We’re stronger together

Many patients have yet to integrate technology into their care because they’ve got concerns about privacy. Many of them may not even be aware that such services are available to them. Insurers and their health partners must educate patients on the benefits of sharing data. 

That problem is not isolated to just the health sector. By developing highly configurable customer journeys that give people exactly what they want, insurers may create a narrative that’s compelling to enable people to trust the market to look after not only their healthcare, but their identity, too. 

Disjointed and patchy coverage

Despite widespread digitisation of patient records, particularly in certain European countries, there’s a lack of joined up data. The fragmented US system is even further behind. 

There must be greater interconnectivity. This requires common data standards and that means people are going to have to work together. Collaboration, or the lack of it, is a key obstacle, but the benefits would be great if the players shared their data.

Putting on a growth spurt

Embedded health is riding a wave of reform that is founded within the embedded finance industry. Commentator, Simon Torrence, has estimated that EI services will be worth twice the combined value of the world’s top 30 banks by 2030: more than $7 trillion.

Digital health services could be worth as much as $660 billion by 2025, say the authors. That’s roughly 25% growth per annum from the $175 billion it was estimated to be in 2019. 

Telemedicine was considered to be worth $50 billion in 2019, yet it is forecast to grow to $460 billion by 2030. The most recent Roland Berger survey estimates that 12% of total global health care spending will be on digital products and services by 2025.

Big money 

Alchemy Crew research says investment in health tech has been vast. Of 91,000 ventures, 18,000 have attracted more than $264 billion as of the first quarter of this year. 

It also estimates there are more than 80 companies that have acquired unicorn status – are worth more than $1 billion –  excluding those that have had an IPO in recent years. 

The authors have identified a number of different types of venture that EI will focus on. 

• health tech AI platforms;
• mobile first insurance platforms; 
• telehealth platforms;
• behavioural and emotional health management platforms;
• fitness and well wellness tracking platforms; and 
• health focused community management platforms. 

These have received the most funding and the report identifies half a dozen companies that have recognised the potential of EI and shifted their business model to meet demand. 

Of the $747 billion global protection health protection gap identified by Swiss Re post COVID, almost two thirds (63%) is in emerging markets. 

Adoption of smartphones alongside rising living standards is likely to push users onto digital health services. But if insurers are prepared to centralise user accounts and share data across trusted third party service providers, they will be able to develop new tailored health services for specific market segments. Two of the examples cited in the report are for pregnant mothers and mental health wellness.

Get your house in order

There are key capabilities required by players if they’re going to be successful in embedded health and the first of them is centralised user accounts. The next is a centralised, consolidated integrated and configurable low code or no code platform and a consumer offering is mobile first, making use of data to profile and engage customers effectively. 

Developing an integrated health and wellness ecosystem will require a comprehensive open global and localised ecosystem of capabilities occur across all aspects of health technologies and services that offer proven value to users insurance integration of existing services and secure data exchange. Everything must be customer centric, deliver relevant health services and meet the needs of the market. 

In many cases, as seen in other embedded insurance scenarios, that means delivering branded experiences in a dedicated app and activating appropriate non insurance channels where relevant. 

No time to waste

While there are a number of case studies of companies the authors say are at the cutting edge of this innovative new area, they are at pains to point out that insurers have realised less than 10% of the potential value of embedded health. 

They cite a 2021 McKinsey survey that found that 90% of international healthcare leaders surveyed agreed that patients wanted integrated digital health journeys yet these journeys simply do not exist. That same survey found that 63% of respondents felt they were best placed to orchestrate a digital health ecosystem. 

That’s not not good news for insurers, but it gets worse. Only 25% of them thought insurance has been a driving force within digital health. And, they said big tech players (62%) and digital health startups (47%) were more likely to be able to fulfil that role. 

We’ve known for a long time that non-insurance players such as the big tech companies are ready to muscle into areas they can fulfil a need that is so far being unsatisfied. Insurers need to understand the role they want to play and get started on this journey, or they are going to get left behind.

For more, see the full report.

Link to full report:: click here

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