50 Asia Insurance Review November 2017
Going Digital Rainy days ahead for life and health insurers:
Is the industry in need of a new “protection umbrella”?
There is a need to reform the life and health insurance sectors. Mr Thomas Dijohn of dacadoo emphasises digitalisation and its use to engage policyholders and incentivise them to lead healthier lives.
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ife and Health insurance has fundamentally not changed since the German Emperor Otto von Bismarck invented the “Krankenkasse” (Sickness Box) in 1883. There, his soldiers would each place coins in the Box and when someone got sick they would claim from the Box. That simple model has served society well the last centuries but the industry is now facing rainy days ahead and it will only get worse very quickly unless several things are done differently. It is time to remodel the Emperor’s innovation for this century.
Another strategy could be to attract a lower risk population such as Gen YZ, which now accounts for 53% of the population, to rebalance the risk. But they require a totally different distribution, engagement and product than their parents – one which is still to be developed by the industry to its full potential. Unprecedented high household savings has created an abundance of cash so improved investment returns is unlikely to be the saving grace in the foreseeable future either. So indeed, rainy days ahead.
Rainy days ahead Poor lifestyle choices mean that chronic conditions now account for as much as 7080% of all healthcare cost leading to both increased medical claims and increased disability claims. Pressure from regulators to include mental health – the fastest growing condition – in policies will push this even higher. This means the pool of profitable people is quickly shrinking. The simple solution to this challenge would be to increase premiums, but that is becoming increasingly more difficult as product simplification and comparison sites are creating a more transparent market with pressure on premiums and the risk of greater churn. In the most mature markets such as Australia, the number of people having a health insurance is now decreasing due to the high premiums.
The Third Wave in insurance The digitisation of insurance is often referred to the Third Wave of insurance (Health Insurance and Life Insurance being the two first waves respectively). The reason why digitisation has earned its right to be called a wave is not only because the products are different (more about that later) but also because of the extensive use of digital technology. A true Third Wave insurer is fundamentally a technology company that is in insurance and not an insurer embracing technology. ZhongAn Insurance – the offspring of Tencent, Alibaba and PingAn Insurance, which had a highly successful IPO in September this year – is a good example of this. Seventy percent of employees are engineers, distribution is entirely digital, and 99% of all claims proceed without human intervention
20/10/2017 4:38:33 PM