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Insurers Must Adapt to Digital Demands

New, technology-driven changes in the ways people live their lives are prompting revolutions across industries. The insurance sector must adapt to these changing needs if it is to remain relevant to customers.

The power and popularity of wearable technology as a generator of health data and the developing potential of genomics are well-discussed issues in the insurance industry. The sharing economy and shifting social factors also mean people visualize risk in new ways.

Insurers want to offer security in ways that appeal to these emerging customer demands. But they are faced with myriad potential practical steps they could take.

The idea of having individuals generate useful health and activity-related data, through wearable technology, is already established in insurance. However, the scale at which highly personalized data is being generated by consumers, whether deliberately or unwittingly, has been growing at a remarkable pace.

Deciding how best to handle issues around data privacy is among the industry’s key questions. Some people will not wish their personalized data to be put in the hands of insurers making decisions about policies, while others will want their data to be used to drive down insurance costs.

See also: ‘AI’ or Just ‘I’? Most Adaptable Will Win!  

To understand how the insurance industry, “insurtech” startups, innovation labs and accelerators view these challenges, we spoke to some 75 thought leaders from around the world in a project we called the Incredibly Curious Adventure.

The results of the research are fascinating. Many of those interviewed saw a real opportunity for the insurance industry to evolve from life protection to life enrichment, firstly through more consumer-centric product design, and secondly through the dynamic use of predictive data that wearables, supercomputing power and artificial intelligence make possible.

However, legacy systems present a real challenge to insurers in the adoption and integration of these new technologies. Many insurers underestimate the readiness of the market to embrace the new opportunities and even to take advice from machines.

Another essential issue for the insurance industry is genomics, particularly with regard to its relevance in creating life insurance policies. In spite of early discussions on the subject, in the last couple of years it has been parked mainly out of view, and the insurance industry has voluntarily agreed not to use much of the data that is available.

But our collective understanding of genomics and its potential relevance to risk assessments has been expanded very significantly in recent years, and it offers the opportunity to do things better with individuals’ consent. Personal genomic information is increasingly being taken into consideration by doctors as they prescribe medications and by the pharmaceutical companies who create those products.

For individuals, the deepening of the information about their own bodies, which they can now access and refer to, is radically different from what it once was. People are increasingly engaged with the details of how best to manage their health, with the help of the digital data they create. There is no doubt that a time is coming when consumers will wish to see this information made relevant to their insurance.

Given these changes, there must be genomic-themed conversations across a full spectrum of stakeholders around what kind of information should be made accessible to and deemed relevant for insurers.

The rich intelligence on everyday health knowledge gained from consumer genetic tests and much wider use of genomics in medicine could mean people are much better equipped to make personal decisions about their insurability than insurers can. While recognizing the ethical responsibility of getting it right, this potential asymmetry of information is especially relevant in a voluntary insurance setting.

There are certainly moral questions that need to be asked before insurers are given a full regulatory go-ahead in this context. But it is clear there are significant potential benefits for consumers who open up access to data on their lifestyles, activity patterns, medical history and their genetic make-up. Importantly, insurers would be able to offer much more personalized insurance policies.

Making the most of data and genomics poses a serious technological challenge. To stay ahead of the competition, insurers must look toward startups to provide support and technical expertise.

Some insurers are in a position to acquire and absorb startups. Many others are not. The chief executives we interviewed said it is collaboration with startups that offers the potential to add value through insight and connection.

At Gen Re, our focus is now on nurturing relationships with startups whose innovations have real potential. We partner with those whose ideas can help insurers be more responsive to the changing dynamics within their industry, whether that is in relation to data analytics, mobile health, artificial intelligence or wearable technology.

Large-scale insurance companies are typically enthusiastic to adapt to change, but are operationally less agile. Insurtech startup companies are helping to change fundamentally the insurance industry and enabling it to meet emerging demand among consumers for greater personalization.

See also: It’s Time to Accelerate Digital Change  

It is our view that insurers must embrace the changes happening and be part of the conversations going on around these fundamental issues. Now, more than ever, the future is wide open. Our aim as a reinsurer is to be part of that global discussion about what the insurance industry can be and what it should offer.

As originally seen in “Future of Insurance” published by Raconteur Media on June 14, 2017, in The Times.

To Predict the Future, Try Creating It

Backed with new capital, powered by digital technology and using decentralized administration, a new model for transparent, simple and customer-focused life insurance couldn’t be easier to visualize. And competition from newcomers means existing providers must innovate. But what can traditional insurers do specifically to — to paraphrase management theorist Peter Drucker — predict the future by creating it?

Today’s insurance market is a customer-centric, buyer’s arena that reflects a palpable shift in power from the producer to the consumer. Insurers’ service offerings need enhancement. If it is felt little value is added to consumers’ daily lives, customers often fail to see the relevance of the importance of cover. Technology can help insurers to innovate and address this gap and deliver enhanced services.

By striving for simplicity, insurers can also increase transparency. That said, no matter how simple the front end is made for the customer, acquiring cover remains an intricate process. Advice, compliance and regulation can clog the process but offer important protection to consumers. There is a delicate balance to achieve.

See also: 7 Steps for Inventing the Future  

Letting people engage in the ways they want is crucial. Trust and advice seem somehow less important to people than before. Today, people make emotional decisions with far fewer facts, and for many a community-based recommendation will do. This combination suggests that social brokering will only grow in importance and that demand for automation with robo-advice will increase.

Consider the disintermediation — the reduction in intermediaries – that transformed High Street banking. An appointment with the manager is no longer needed to set straight one’s personal financial affairs. We fend for ourselves by banking online and using mobile-first apps to view statements, to set up transactions and to move money about. Customers now have similar expectations of life insurance.

To provide more flexibility, insurers can offer products that work in a completely modular way — products that can be built up or down and switched on and off to reflect much better how life’s risks ebb and flow. It’s likely the silo-based approach to the design and sale of line-of-business products is not sustainable. Product fragmentation with more diverse offerings will offer tailored products that fit with the way people live their lives.

Personalization gives insurers the opportunity to transform the services they offer and take a real stake in the future health of their policyholders. One way is to shift from risk identification to risk prevention that is based on knowledge of behavioral change. While using data from wearables is a start, more support can be provided — not just to the fittest customers — by developing apps and technology that engage their unique health needs.

Data from health apps, for example, is just one source that will give insurers access to a real-time view from which to assess risk, instead of relying on past data. However, continual engagement requires transformational change in the industry. To achieve this, insurers can — and are — engaging with experts and companies outside the sector. As the boundaries between insurance and adjacent businesses fade, roles and skill sets within insurance will also change, resulting in a need for more diverse recruitment.

See also: How to Build ‘Cities of the Future’  

Much is being said about big data, in particular how better use of the insights can make insurers’ operations leaner. But analysis of large datasets gives established corporates and newcomers to the industry identical insight. While agility of execution may favor startups, it’s industry knowledge that puts insurers in a strong position to turn data into actionable insights.

For more perspective on how technology is changing life insurance, click here.

Can Apps Manage Mental Health?

Improved awareness and recognition of mental health problems and their complexity puts pressure on health systems to increase care. In turn, this stimulates exploration of the potential value of software applications (apps) run on mobile devices. The ubiquity of smartphones makes them an ideal tool for apps that can help individuals manage mental health.

Apps create long-term patient health data in a way episodic clinic consultations cannot and generate a personal health record fundamentally different from a clinical patient record. Doctors have much to gain from the gaps in information being filled by continuous monitoring in this way. Insurers also can benefit from the potential of this technology, especially for claims.

Health apps used on mobile devices can monitor physiological cues associated with sleep disturbance, anxiety, depression, phobias and psychosis. For example, depression is associated with a fall in activity levels – less exercise, movement and fewer social interactions. Sensors in smartphones can help spot patterns of altered behavior that may represent the early warning signs of lowered mood.

See also: New Approach to Mental Health  

Some apps help diagnose problems. Others help people track and manage mood using self-assessment techniques augmented by coaching functionality. Online environments are a gateway to support from more specialist clinical resources. The resources allow patients more control of their mental health management while enabling clinicians to monitor and support them remotely. (Read my blog, “The Growing Impact of Wearables on Digital Health and Insurance.”)

Apps can also help with treatment by sending reminders about medication or appointments, regardless of the person’s location. And they can provide distraction from cravings or link with social networks at times of stress. This “nudging” is effective at altering behavior; for example, integrating text messaging in smoking cessation programs improved six-month cessation rates by 71% compared with the regular treatment.

However, work remains to be done before apps can integrate with insurers’ processes. The confidentiality and use of personal data generated and stored by apps is complicated and needs clarification. The accuracy and sufficiency of information is a potential concern, and hardware constraints may limit potential. More evaluation of the impact of digital technology is needed in research and clinical practice.

See also: Not Your Mama’s Recipe for Healthcare  

Meanwhile, insurers could engage with emerging providers of software solutions. Services like these will, over a relatively short time, become highly influential in the lives of people living with mental health problems. Pilot schemes that compare current insurance methods while evaluating new ones would take us one big step forward.

How Many Steps Mean Longer Life?

Fitness trackers can be a convenient way to monitor the number of steps taken every day. Some insurers have even started using them as a proxy for good health, selling life cover to people who are already fit and who track their steps. Insurers may even reward policyholders’ physical activity with lower premiums and other incentives.

The assumption is that regular exercise, especially the number of steps taken, is a predictor of lower mortality. Exercise is known to confer health benefit by improving mental health, reducing cardiovascular risk and lowering cancer mortality. The question is, how many steps might lead to a longer life?

Adult walking cadence is 100 steps per minute, a rate that demarks the lower end of moderate-intensity exercise. The World Health Organization suggests an ambitious minimum of 150 minutes of “moderate-intensity” aerobic physical exercise throughout the week, or 75 minutes of vigorous-intensity or a combination (setting aside recommendations for muscle strengthening). Public health authorities across the world have adopted these guidelines to help people improve health, build stamina and burn excess calories.

See also: Wearables: Game Changer or a Fad?  

Manufacturers of fitness trackers and wearable technology, ever since the Japanese pedometer that came out for the 1964 Olympics, have commonly set the goal at 10,000 steps a day, a marketing ploy not rooted in science or WHO guidelines. Although this “10,000 steps” goal varies greatly by leg length and gait, it translates into roughly five miles a day for the average person and remains a considerable distance, especially considering that the average British adult walks 3,000 to 4,000 steps daily. The figure encourages sedentary people to move but isn’t a magic number on a doorway to health nirvana. Even 5,000 steps a day could be too high for some older adults or people with chronic illness, but small increases will confer health benefits.

It’s also important to distinguish between incidental and session-based physical exercise. Incidental exercise is the result of steps taken during the course of the day to get us from A to B, but it neither accounts for the pace nor intensity of the exercise or the true level of fitness. A three-hour workout “session” requires a much higher level of fitness than just walking, not to mention a significant level of motivation.

Insurance products that discount for steps walked each day are likely to have broader appeal than those that mandate “session-based” exercise. Asking additionally for, say, three hours per week of sweat-inducing exercise could literally be a step too far. Those unaccustomed to such levels of exercise are likely to conclude that this insurance product is not designed with them in mind.

Recent evidence suggests activity tracking brings no immediate measurable health benefit but this misses the point. Regular exercise has benefits that are not necessarily related to easily measurable variables such as weight and blood pressure. It’s important to understand that long-term outcomes are what are important for insurers.

See also: Wearable Tech Raises Privacy Concerns  

Although the WHO recommends 150 minutes of moderate-intensity exercise a week for ages 18 to 64, a critical review of the literature indicates that just half this level still brings marked health benefits. This suggests insurers could lower the bar and design life insurance programs that would also appeal to older people or those with chronic disease or restricted mobility, who may otherwise rule out buying a policy explicitly linked to fitness.

How You Sleep Matters to Insurers

Sleep allows the body and the brain vital repair and recovery time, giving hormones the opportunity to replenish. Both inadequate and excessive sleep have been associated with early death. We are getting a better understanding of the health consequences of low levels of physical activity combined with inadequate or excessive sleep.

Having at least seven hours of sleep each night has been described as a “health necessity” for adults. Less leads to reduced cardiovascular fitness and metabolic disruption as a result of altered hormone levels, which can cause weight gain. Excessive sleep is probably evidence of an underlying chronic illness that will itself shorten life.

Wearables and accompanying apps help monitor phases of shallow and deep sleep at night. The amount of time spent in and out of each phase can be influenced by underlying health. Sensors in the devices can detect when a person is lying in bed and moving, generating data that could be valuable to life and health insurers because the amount and quality of sleep provide important insights into our long-term health.

Sleep is influenced by genetic, medical, behavioral and environmental factors, and problems often increase with age. How well we sleep is governed by melatonin (released from the pineal gland), matched by a fall in levels of the activity-related hormone serotonin. These changes align our body clocks with the circadian rhythms of day and night.

See also: Confessions of Sleep Apnea Man  

Regular bedtime in an environment with suitable levels of light, sound and temperature is important for “sleep hygiene.” Smoking, alcohol, caffeine or food before bed and exposure to “blue” light from tablets or screens can all disrupt sleep. Poor sleep may result from chronic health problems, anxiety or depression but causes psychological distress in its own right. Work performance, judgment and social relations are harmed. Excessive daytime tiredness increases the chance of accidents.

Disorders of sleep include nightmares and sleepwalking. Sleep apnea is most associated with excess mortality. Often obese, those suffering from sleep apnea are at particularly high risk of cardiovascular problems. The partners of these patients also often suffer from chronically disturbed sleep.

While consumer-grade wearables and apps may lack the detailed analysis in sleep studies that includes core body temperature, hormone levels, circadian rhythm and brain activity, these devices offer an approximation of sleep architecture that could help individuals improve sleep hygiene. For insurers, self-reported sleep data could be incorporated within wellness and fitness product protocols in the future.