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Data can be an indispensable resource to health insurers. That’s true, though, only if insurers identify how to use that data to improve decisions—such as claims decisions, pricing, rating, or underwriting—for a range of users.
Health platform innovation relies on data, analytics, and artificial intelligence (AI). Applying data in a valuable way requires health insurers to turn to sophisticated analysis techniques. Implementation of an effective business data strategy calls for a robust toolkit that allows a company to acquire a variety of data sources, such as open health data platforms by independent or government vendor, wearables, or a variety of internal data sources, including customer interaction history and policy records.
New and emerging technologies, while not required to achieve innovation, can certainly be key enablers that help deliver desired digitized outcomes and automate core processes. When evaluating what investments to make in technology, health insurers should take a strategic approach to their goals.
Strengthen the core.
In health insurance, as highlighted in the Celent report Technology Trends in Health Insurance, digitization presents the means to collect relevant data, then turn it into valuable information to make optimal insurance business decisions with limited human effort. Insurers, with any line of business, can take ambitions approaches to intended outcomes, even when dealing with risky projects, such as core system replacements.
To act on digitization goals, health insurers need to implement advanced analysis techniques to turn data—the raw material to assess, underwrite, and price a risk—into valuable information. Three main elements can help digitize core insurance processes effectively, with the goal of automating core insurance processes in full, and limiting human interactions wherever possible:
- Data gathering. Health insurers can tap numerous data sources. Consider internal data warehouses/data lakes, electronic health records (EHR), eApp input, labs, claims experiences, social media, wearables, connected wellness/lifestyle data, and genetic data (if permitted).
- Analysis moves data initiatives forward, turning data into a true asset. Approaches to analytics may include machine learning (ML), eApp analysis via rules, analysis of internal and external data, predictive models, historical data analysis of claims, and risk quantification.
- Automation technologies. Support low-touch transactions by turning to the technologies that allow your organization to automate the core insurance processes in full. Such technologies include eApplictions, eSignatures, rules engines, dashboards, data integration, business intelligence (BI) tools, AI modelling and model integration, and data extraction.
Fully automated core business processes are key to improving health insurers’ margins. While that may be obvious, how to tackle legacy transformation isn’t always as clear.
It can be all too easy to underestimate the value of preparatory work. To bring new business capabilities in-house, blend three complementary techniques. Taken together, these digitization enablers help insurers succeed in their highly risky core system replacement initiatives.
First, focus on development. Long the preferred option for front ends, many insurance companies continue to want front ends to be customized. Development may include internal development or development with an external partner, typically a system integrator.
Add a focus on acceleration. This requires leveraging tools to speed up legacy transformation. These may include a low-code platform or middle layer, combined with relevant technologies for automation.
Combine these with commercial off-the-shelf (COTS) system implementation. The COTS approach requires selecting a vendor that offers an out-of-the-box system, then finding components that meet functionality requirements.
Build an effective toolkit to support initiatives.
The appropriate strategic approach for technology initiatives promotes progress in five key areas:
- Customer engagement—which may be thought of as a continuum—relies on value chain automation, customer centricity, guided immersion, and an engaged community. For health insurers, engagement may be optimized by supporting do-it-yourself (DIY) services and providing observational data for underwriting, pricing, and claims.
- Disruptive innovation considers how to provide convenient, adjustable premium payments from continuously observable data and usage metrics. This results in a business data strategy that can help design the overall customer experience journey.
- An ecosystem approach to growth taps into a wealth of opportunities for innovative products and services. Executing that innovation, however, can be challenging. Innovation execution requires strategic focus; organizing for innovation (e.g., across multi-disciplinary innovation teams and product management roles; being focused on product/process outcomes; having clear definitions of product management roles); fostering a culture of creativity; and an emphasis on design, including holistic product visions and human-centered design that ensures that new offerings resonate with the needs of their customers and how they access and consume healthcare. Letting business strategy drive the data and analytic strategy can help close gaps in customer experience and operational effectiveness roadmaps.
- Product innovation and differentiation relies on analytics, which may serve as a fabric that meshes services and customer data with the capabilities of staff and vendors. For example, wearables and connected IoT devices, paired with machine learning ops (MLOps) may yield useful insights for claims and loss adjustment processes.
- A diversified technology transformation toolkit: Life insurance risk assessments may be complemented with external health and wellness data points—third-party data or alternative data that improves underwriting, claims, and risk analysis for insurance coverage
Make the insurance journey simpler, faster, and smoother.
When evaluating and deploying new technologies, health insurers should create a structure for success. Innovation is strengthened by having a strategic focus, relying on scientific methods, and using dynamic planning. The result: initiatives that support customers and the insurer, alike.
Nicolas Michellod is the digital proposition leader and a senior analyst in Celent’s insurance practice. His work centers on providing a digital and intuitive journey that helps customers capture the value of technology in financial services. His insurance research focuses on Continental European insurance IT and business issues, with an additional focus on the emerging markets of Eastern Europe.