What the future holds for insurance and healthcare
By Paul Goodhind
Featured on PostOnline.co.uk
The insurance industry is at something of a crossroads, with regulatory requirements insisting on total transparency in terms of advice and access, and a number of other challenges around capital and distribution. Paul Goodhind, partner and chief strategist at Kamet, argues although it is a sector driven by data, it doesn’t always harness it optimally in terms of underwriting, product development, pricing and claims management.
Making data smart can lead to a number of advantages including better insights into risk and pricing, a more streamlined sales process to avoid repetitive form filling, improved understanding of client behaviour and the identification of fraud.
But as great as these benefits sound, there is currently something of a disconnect between the potential and the reality. Insurers have a wealth of data at their fingertips, but their ability to turn this into actionable pricing insights is often constrained by compartmentalised and legacy IT architecture, not to mention the time and effort involved in building new actuarial models.
External data is also not always utilised in the most efficient manner. Machine-learning technology can help make huge strides in these areas and break down the barriers; redefining the insurance risk modelling process by making it far less resource intensive and providing underwriters with contextual external information to help with their decision making.
As much as advances in technology can help make huge strides at the back end of the insurance ecosystem, many future improvements will be driven by tailoring products and advice to adapt to changing consumer behaviour. Among these societal shifts have been the growth of the gig economy and the resultant increase in individuals with unpredictable earnings.
As much as being self-employed in this manner brings certain lifestyle benefits, it comes with a slew of logistical challenges. Not least is the fact that these workers are not covered by their employers’ insurance, creating a significant protection gap. Protection products are often complex and hard to navigate from a customer perspective, only being offered reactively around certain life milestones such as buying a house.
Artificial intelligence-based tech has the unique ability to break this bottleneck around distribution – including reaching out to those not on the property ladder – and give easy access to personalised, regulated, and transparent advice. As well as enhancing the insurance infrastructure, technology is having a positive impact on the health ecosystem.
In particular, wearable devices and the Internet of Things are being used to deliver innovative solutions across the patient journey with some of the most significant advances being made around chronic disease management which account for the majority of payer costs The collection of real-time data allowed by IoT-enabled devices can help patients better manage their conditions and drive behavioural changes; resulting in better adherence to medication programmes as well as flagging up acute episodes where intervention might be required.
At the other end of the prevention spectrum – changing behaviours in order to prevent future chronic conditions – the success of wearables is less validated. While some health companies and insurers are using data gathered from IoT devices to offer discounts to patients that have a positive lifestyle, it is more likely this is operating as a selection tool to identify healthier (and lower risk) patients than a genuine attempt to drive change among a previously unhealthy demographic.
Preliminary assessments suggest that more specific uses are adding greater value than general AI. While symptom checkers are not yet accurate enough to replace personal medical advice from a professional, there is clear evidence than AI can solve narrower problems such as interpreting diagnostic images and test results.
News coverage around the rise of the robots often presents a slightly negative image where humans are no longer in control of their own destiny. But far from this dystopian portrayal, the reality is that technology can help save lives, time and money, driving the innovation the insurance industry needs if it is to continue to meet the needs of an ever-evolving society.