Carly Fiorina, former CEO of Hewlett-Packard, expressed it very well when she once said: “The goal is to turn data into information, and information into insight.”
In terms of what we do, at LexisNexis Risk Solutions as a data exchange and data aggregation company, we take raw data and define patterns and risk attributes to create new insights—effectively new data assets—it’s a phrase that sums it up nicely.
There is a drive to gain access to more data and to derive business impact from the data. However, recent history shows that not all companies have been good at defining exactly where in the value chain the data can add value. This goes for any analytics-driven business, such as insurance, which in future will receive a lot more external data from nodes in the Internet of Things (IoT) and the world of connected healthcare in particular.
Connected devices and fitness trackers are the new buzzword in healthcare and the health insurance industry. In many ways they represent the future for health in terms of external data. But capturing value from that information is going to be about much more than just collecting the data. It is about looking at the data foundations and the business foundations:
Generating and collecting data: Extraction of data from sensors, loading and appending of external data, possibly with creation of an analytical sandbox
Refining data: Normalising, structuring and cleaning data, for example, between many different medical data tags, standards, hospital information systems, billing categories and naming conventions in India and internationally
Turning insights into action: Process redesign and creating the tools and technology infrastructure ready for automation and real-time decision making, for example, in claims processing or in risk scoring for underwriting purposes
Driving adoption: Build human skills and management capabilities, scale up the road map from initial pilots
Create tracking and visibility of the ongoing impact: Define the necessary business roles, develop the partnering and ongoing licensing strategy with the necessary training and talent development.
As we commented in a previous blog article, this process of deriving value from data is very much about the combination of data resources, with the necessary human talent.
Connecting new data sources to the health insurance eco-system will be about a new culture of inter-connectivity connecting to new partners, apps and data platforms.
It will be about vertical information silos giving way to horizontal processes. The goal is to build an IT infrastructure that is adaptable to change. Data exchanges, web services, knowledge management and virtualization software now make it possible to share applications, business intelligence and IT resources across vast networks.
Ushering in a new era of advanced analytics for health insurance underwriting, this new world is going to demand precision, accuracy and efficiency. Wearables and medical devices are providing a pool of relevant data for the benefit of insurers and customers alike. On their own, the usage of these devices is limited. When the individual devices are connected to others, and the network is in turn connected to other networks, the potential of the system is immense in providing relevant data to enhance decision making in insurance.
Wearables, hearables and nearables
Information from sensors such as activity monitors, step counters, glucose or stress (electro-dermal activity) monitors, when connected to networks, perfectly exemplify the IoT, an asset of great value to life and health insurers. There are already examples of insurers combining such devices with a new approach to discounting insurance policies based on behaviour of the individual.
Generating useful data by interacting through networks, these sensors are the building blocks of the data supply chain open to insurers for risk assessment, underwriting and improving product portfolios.
The devices can be broadly categorized as ‘wearables’, ‘hearables’ and ‘nearables’, each with some unique features for gathering specific kinds of data. As a result, what was unimaginable a decade ago is the reality today.
Research has shown that Apple’s smart watch can successfully detect atrial fibrillation, heart beat irregularities, by closely monitoring arrhythmic heart rates which can prevent strokes resulting from the heart disease. Other types of popular devices such as the Fitbit and other customised fitness trackers are already playing a role in how individual as well as group health insurances are underwritten, in partnership with participating insurers. This is due to their value in addressing some common diseases such as sleep apnea, diabetes and cardio vascular health and mental health in general.
A new health insurance model
For some time now, established health insurance models have sought increased policyholder interaction and engagement. Developing improved wellness insurance models with the use of world-class medical health monitoring devices and sophisticated applications would help drive the era of accurate and personalised health plans. In this model insurers would achieve a better insight into:
- Disease prediction, detection and progression
- Timely intervention and cure or management of illnesses
- Areas where underwriting and risk mitigation can be improved using data from wearable technology
- Personalization of premiums based on preferences or requirements
- Timely changes in policy premiums based on emerging data from health-tracking devices.
As is evident, health monitoring devices are already creating their own niche in health insurance. As the current trend progresses, the industry will seek enhanced feedback loops of overall wellbeing and health. In the near future, the insurers who truly win will be those using open technologies and data pathways in innovative ways, to better assess risk and change the game of health insurance for good.
Examples that are turning insights into action
Today health insurers are collecting data from connected health devices and converting the information into redeemable points that offer discounts to policyholders at the time of renewal of health plans.
This requires a careful verification and normalization of data, comparable to how we at LexisNexis compare data quality and accuracy between different inputs and benchmarks in global vehicle telematics data for underwriting and risk purposes.
Vitality Group has collaborated with a number of leading health insurers in the US and UK. In one such venture, the John Hancock Vitality programme, policyholders are rewarded for using Apple Watches which send information directly to the insurer.
According to results recently presented by Discovery Vitality, there is a 18% reduction of hospital and chronic claim costs for the batch of Vitality members that use the Active rewards system alongside the Apple Watch, compared to the group of insured who do not use an Apple Watch.
Another US insurer programme, United HealthCare Motion comes with financial incentives for policyholders who are able to meet assigned walking goals tracked by a customised wearables. Consumers can earn incentives in hard cash as well as sports and related benefits on a daily basis, based on the intensity, tenacity and frequency of walking. Beam Dental, a dental insurance company has developed a dental insurance policy that uses a Bluetooth-enabled toothbrush to monitor the policyholder’s dental health.
The Insurance Regulatory and Development Authority of India (IRDAI) recently announced an initiative to study technological innovations in the form of wearables and their applicability in the Indian health insurance sector. In an order the regulator announced: “In the context of both health insurance and life insurance, wearable devices could be used to measure personal fitness [and] incorporate a healthy lifestyle.”
Aditya Birla Health Insurance rewards its Activ policyholders based on activity data sourced from their wearables. Rewards can be up to 30% per year depending on how active the insured has been. Tracking and leveraging health data has the potential to help both insurance companies as well as customers. On the part of the insurers, data from these devices will help cut the volume of claims in the medium and long-term, particularly in the area of ‘lifestyle’ diseases and non-communicable diseases. CignaTTK Health Insurance, another Indian health insurer, has also incentivised fitness data with its Get ProActiv programme.
The future for wearables in health insurance
Currently only a handful of insurers are applying wearable technology and engaging with the population, tracking their health and sharing the data freely. But despite the obvious challenges for public information and driving the necessary behaviour change, we feel it could gain more popularity and traction.
The digitization of health insurance, and the correct implementation and use of wearable technology by insurers depends largely on how soon the consumer undergoes this significant behavioural change. The pilot projects of insurers to date have been successful, but only in small numbers of the most adaptable consumers.
Another privacy challenge is that the data generated from these devices is largely private information which many people can choose not to disclose. To mitigate these challenges, insurers are choosing to amply reward policyholders for using technology and for exchanging information. Particularly amongst younger consumers, there’s a growing awareness that their data has value and that they can gain something back by sharing it with their service providers.
For health insurance policies, we can expect further new business models—moving from claims payer to prevention partner—and a future of highly competitive risk rating, based on an improved real-time understanding of health data and its links to mortality and common diseases. All of this has the potential to shift underwriting practices away from historical and statistical data to personalized predictive modelling. With the challenges of inter-connectivity and privacy overcome in an ethical manner, wearables can truly revolutionise health insurance on a global level.
Our tests at LexisNexis, based on real policy history and claims information from multiple insurers, have shown that even with the existing data quality that’s available for access, and the data infrastructure challenges, there are huge economic benefits from doing more with the data.
Follow the link to the LexisNexis Risk Solutions India website to find out more about how we support insurers. Follow these links to read more about specific solutions for life insurance, health insurance, and motor insurance.