The insurance industry has slowly embraced digital and mobile technology (strong emphasis on slowly) over the past 10 years. It’s time to break through the first phase of technology adoption and move into a new phase of tech-enabled innovation.
The early phase of technology adoption usually sees incumbent businesses apply technology to existing products and modes of thinking. So, with the first wave of digital adoption in health insurance, we saw plans launch member portals and mobile apps where users could view their explanation of benefits and chat with customer service representatives online. However, nothing about the underlying insurance plan changed.
When it comes to plan design, insurance companies too often think within existing platform limitations. They most often ask: “What can we design that will work on our existing platform?” Then they design the plan and move on to implementation. This is invariably the sequence when developing insurance products and bringing them to market.
The process makes sense at first, because the development of new platforms takes time and costs a lot of money. But these platform limitations are holding us back from designing new tech-enabled insurance products that can truly change the market and better serve customers.
Tech-Enabled Insurance Innovation Will Guide the Future
Starting from scratch is a startup’s advantage, which incumbent insurance companies don’t have.
Oscar Health Insurance is a great example of a startup making heavy investments in new technology and innovative plan designs to create a better member experience. Its telemedicine service and digital provider directories aim to improve access to free or low-cost care for members with high deductibles.
Major medical health insurance is far more regulated in its plan designs than other forms of insurance. If you could start another ancillary insurance product from scratch, however, what kind of plans would you design? If you follow the old way of thinking, you will design the plan first and then think about how to platform it next.
Granted, there are some advantages to this approach. You can create a better version of existing products, like, for example, critical illness insurance policies. Another advantage to tweaking a known insurance product is that you can often rent an existing technology platform to get to market quickly. But if you do that, you risk designing a product that’s not differentiated enough from existing solutions to entice employers and brokers to switch. You also miss an opportunity to create a better solution for your members that actually improves their health.
When we started Brella, for example, we knew we wanted to make a real difference in the health and financial wellness of our members. We saw that as the only reason to go through the trouble of developing a new insurance product — but we needed to build everything from scratch.
See also: Crisis Invigorates Insurance Innovation
The next phase of insurance product innovation is tech-enabled thinking. When you design a new insurance product, think of it in the context of its tech platform. That means you must have both insurance experts and technologists at the table. This is really powerful; it is what enabled us to come up with the concept of a supplemental health insurance plan that pays benefits on diagnosis.
An example of this is Beam Dental’s dental coverage insurance, which uses a connected toothbrush to reward groups with good brushing habits with rates better aligned to their lower-risk profile. Eden Health is also making strides with its primary care solutions that weave together healthcare navigation services with direct primary care. Its tech platform was nimble enough to quickly help employer customers with COVID-19 screening and testing to keep their teams healthy and working through the coronavirus pandemic.
At Brella, we learned from our customer research that out-of-pocket costs caused by rising health plan cost-sharing are a major pain point for families. Existing supplemental plans were not designed to cover that gap. In addition, those plans were rarely used, and, when they were, customers were far from satisfied with their claims experience and the complex rules associated with the plans.
As we thought about building a supplemental insurance plan to address this need, we asked ourselves: “What does a plan design that pays benefits on diagnosis allow technology to do?” and “What does technology allow us to do with the plan design?”
Our tech-enabled plan design lets us pay benefits sooner because the diagnosis happens early in the care journey. This approach also dramatically simplifies the claims and adjudications processes, so it’s easy for customers to file claims in minutes online and through our mobile app. What’s more, it opens opportunities for automation that didn’t exist in past supplemental insurance plans — which were stuck in the first phase of technology adoption.
These are the kinds of differentiated benefits that help customers and their families. That kind of value is worth the price of change for employers to embrace innovative insurance solutions.
Essentially, tech-enabled insurance plan design asks: “What can you do with the plan that unlocks new technical capabilities?” and “What can you do with technology that makes new plan features possible?”
In the next phase of insurtech innovation, more partnerships between insurance experts and technologists are necessary. We need more tables surrounded by actuaries and engineers to create solutions that will realize the world we all want — one where health hardships don’t become financial burdens.