How digital health platforms, insurance companies can partner for better health outcomes?

Black swan events such as COVID-19 have highlighted the need for people with chronic conditions like diabetes to better manage their health while simultaneously having financial protection to safeguard against unwanted healthcare happenings.

In India, however, people with diabetes find it difficult to purchase health insurance with adequate protection. The challenge arises because of the stringent entry criteria for health insurance products in the case of persons with chronic conditions such as diabetes. Together with high premiums, this makes health insurance relatively inaccessible for these segments.

Conversely, India’s health insurers lack access to the requisite data for refining their underwriting and pricing approach for these population cohorts. It is against this backdrop that digital health start-ups can help health insurers access such select and large pools of consumer cohorts – earlier inaccessible to insurance companies.

Such partnerships are all the more imperative as extended lockdown and social distancing restrictions due to the pandemic have nudged insurers to rely heavily on deploying digital tools to sell new policies and settle claims. As per a PwC report, COVID-19: Impact on the Indian Insurance Industry, the extent of the pandemic’s impact can be gauged from the setback in the insurance sector’s two most productive months, March and April 2021. The hit – 30 percent for life insurers in March and 15 percent for non-life corporate renewals in April.

The report mentions that private health insurance covers only 18 percent of the urban populace and marginally more than 14 percent in rural regions. As COVID-19 risks are not priced presently under active offerings, such claims are slated to create an extra burden for insurers if treatment is taken outside government hospitals.

Indeed, one of the leading insurance firms revealed its health insurance claims soared from 49,000 in the entire period of the last fiscal to 46,000 in just the first quarter of the current financial year. This resulted in a loss ratio of 91 percent – an all-time high for the insurer. Such high COVID claims are just one element of the extra stress burden that insurers are currently confronting.

Nevertheless, insurance entities opine that pandemic-related apprehensions have driven more people to purchase health insurance policies. As a result, health insurance inquiries have jumped by around 30-40 percent. But insurers are hindered by the challenge of lack of specific data linked to patient profiles, morbidity levels and the cost of treatment.

Such data are necessary to underwrite risk and decide product premiums designed particularly for COVID-19. Without this data, insurance players could end up either under- or overpricing plans.

Fortunately, start-ups deploying digital health management tools and virtual doctors can help insurers access a treasure trove of captive data through symbiotic relationships. What’s more, these digital tools and online doctors help ensure improved health outcomes, given their daily monitoring regimen of members’ health conditions. Digital healthcare tools can provide longitudinal health data, enabling insurers to understand the evolution of chronic diseases such as diabetes. This can help insurers build more customized products with varied price points to suit the needs of different target groups.

Moreover, digital health platforms can cater to pan-India patients. Their all-India reach could benefit insurance companies by facilitating faster and deeper penetration across the country, especially in targeting uninsured groups. Additionally, one of the biggest benefits of such partnerships between health platforms and insurers is that it can help drive down the expenses of the latter. In turn, this allows insurers to offer patients more affordable plans covering varied ailments, including chronic conditions.

Combining a health insurance product with a comprehensive digital health ecosystem helps insurance companies enter new customer segments and drive higher proximity with more precise pricing and improved persistency. Over time, with better health and prescription data, the insurance partner can improve loss ratios and enhance underwriting processes.

A crucial element to manage loss ratios is preventive care. Unfortunately, outpatient care in India is mostly out of pocket. This is the primary reason why chronic conditions are not well managed because, unlike the developed nations, no stakeholder in the domestic healthcare system is incentivized to take good care of patients and manage their condition.

Nonetheless, conditions like diabetes are the perfect candidate to be managed digitally – something that has been proven across the world. Therefore, insurers can now team up with companies providing digital solutions to make sure policyholders can manage their health conditions. For insurers too, this is an inexpensive solution facilitating greater reach and, in due course, a reduction in claim ratios of large populations.

Holistic solutions also allow digital health management companies to ascertain that their offerings are more comprehensive and establish a strong base driving greater customer loyalty. For customers in markets such as India, where health expenses are typically out-of-pocket, it means greater availability of insurance products that comprehensively manage their healthcare costs more effectively, providing them with better health outcomes.

Finally, as insurers seek novels ways of penetrating untapped markets across India, partnerships between digital health start-ups and insurance companies are the best option for benefitting all stakeholders – patients, physicians, digital platforms and insurance players.