Digital disruption is huge news for the insurance sector, putting data front and center of how insurance providers measure risk and establish premiums. However, there’s one insurance niche where many of the benefits of digital disruption are yet to fully filter through: corporate healthcare insurance.
The corporate wellness industry is thought to be worth around $8 billion a year, yet the insurers that service this industry largely struggle to differentiate their products. As is often the case, commoditization is putting pressure on the bottom line, with insurers feeling pressured to reduce premiums to compete with other providers. The key challenge facing corporate healthcare insurers today, therefore, is to build market differentiation in such a way as to avoid unnecessary price erosion.
Leveraging wearables
In meeting this challenge, insurers need to get innovative. The good news is that the recent explosion of fitness wearables, devices such as Garmin, Fitbit and Apple-style bracelets and smartwatches, provide the perfect platform to leverage existing technology.
Many people already own such devices; but for those who don’t, employers are willing to invest in them as part of their corporate wellness programs: in one study, 30 percent of employers said they would offer staff subsidies or discounts for fitness wearables.
The benefit of fitness wearables is that they provide what every good insurance business model needs: data; and reams of it. They provide a tool through which insurers and businesses alike can gather important biometric data on their employees – such as how often they exercise, what their BMI is, and how healthily they eat – which can then be used to more accurately measure risk and set premiums.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Knowledge, as they say, is power and in this case, the knowledge provided by wearables gives insurers the power to reduce their premiums only where it is profitable to do so: i.e. when the data shows the risk is acceptable.
A win-win scenario
In this approach, everyone wins: the insurer is able to create market differentiation and manage their relationship with their corporate customers more scientifically; the corporation is able to reduce its insurance costs while also providing fun, interactive wellness programs that can help attract and retain talent while boosting productivity; and employees benefit through engaging fitness programs that make them healthier, while benefiting directly through the healthcare package itself.
This is an insurance model that fits perfectly with the lifestyles of the generation of workers coming into the workforce today. While Gen Xers among us might still feel wary about sharing personal data with not one, but two companies: the business and the insurer, this simply is not a concern for Millennials and Gen Zers. The next generation of workers will be comprised of people who have grown up readily sharing their information on social media sites for little or nothing in return. As long as employers provide a clear choice of whether or not to opt into the service, most people will be more than happy to share their fitness data – especially if they can clearly see what’s in it for them.
Getting started
The main challenge for insurers that want to leverage such an approach will be technical: building and maintaining a platform capable of collecting, processing and analyzing the data from many hundreds of fitness wearables.
Such is the complexity and scale of this task, it is likely that insurers will need to leverage the pre-built, customizable platforms on offer through the market. Accenture Fit is an example of such a platform. Leveraging a full cloud tech stack from Oracle, Accenture Fit provides all the data integration and analysis tools required by insurers, as well as the front-end systems needed to run corporate wellness programs. The later can be accessed both through the web and through mobile apps.
Signs of success
Through our own platform, we have seen just how successful this new approach to corporate healthcare insurance can be. For example, employers are able to set fun challenges for employees – such as walking the most steps per day, or beating personal best jogging times – that have a social and competitive aspect to them. This is nudge theory in action: helping people make the right decisions through the gamification of health and wellness.
With happier and healthier employees, we’ve also seen productivity gains. In Australia and the Philippines, we’ve seen a significant reduction in sick days, and the mood and motivation of our employees have improved substantially.
The insurance imperative
All insurers today need to be looking at such disruptive business models if they are to survive. If you are not weighing up how innovation can deliver competitive advantage, you can bet that other healthcare insurers are. Digital disruption in other industries has shown one irrefutable fact: companies that innovate and re-invent themselves thrive, those that don’t fail.
Photo: Getty Images
