From Babylonian traders who redistributed their wares across multiple vessels to limit losses at sea, to blockchain developers who distribute data across multiple servers to mitigate risk, insurance has come a long way.
But the journey has been a reluctant one. Industry incumbents traditionally set the rules and controlled the lion’s share of the market. Now, new players have entered the arena and are unsettling the status quo. In a spirited contest between incumbents and newer entrants focused on technological disruptions in the insurance business, agility and innovation are seeking to challenge longevity and scale.
Established brands, however, are realizing they need to embrace change or concede market share. Many of them are already partnering with innovative technology startups to offer services that resonate better with their digitally focused clients. In doing so, they’re also reimagining their value proposition and taking on a more significant role of avoiding and preventing risk, rather than just mitigating it.
Lisa Callaghan, vice-president of strategy, marketing and communications for Manulife Financial Corp.’s institutional markets, says being able to interact with plan members how, when and where they want seems to be the overarching theme. Technology, she notes, has become the big enabler. “Technology is the language of the future. We will see it influence all elements of the health-care cycle, whether it be access to care, diagnostics, treatment, wellness monitoring or management. Business models will continue to evolve based on what technology can bring.”
The requirements of consumers who consider themselves to be digital natives are markedly different from their predecessor generations. “Our benchmark is not just our competitors but also our clients’ last retail experience on Amazon and Google,” notes Brad Fedorchuk, senior vice-president of group customer experience and marketing at Great-West Life Assurance Co. “We need to take convenience and personalization to a new level.”
The convenience factor
The old inside-out approach of trying out what looks to be a good idea doesn’t work anymore, says Fedorchuk. “We have started to think like our customers and engage the marketplace much earlier in our design thinking. Our focus is on how we can make it simpler and more convenient, integrate and aggregate, remove redundancies and leverage big data to anticipate client needs better.”
Last year, Sun Life Financial did just that when it refreshed its free mobile app. The app now takes self-service to the next level by allowing plan members to quickly check coverage, review plan balances, find and review health-care providers, submit claims, make retirement contributions and manage workplace savings and investments.
“The convenience factor is a huge draw,” says Kevin Dougherty, executive vice-president of innovation and partnerships at Sun Life. “What people did in a day or a week, they do in 12 seconds now.”
He notes that in 2017, Sun Life recorded 43 million sessions (10 million through mobile platforms and 33 million on its website). The number of people submitting claims on a mobile device increased by 60 per cent over the previous year.
“There was a whole industry built around employee booklets,” says Dougherty. “But much less than 10 per cent of our claims are on paper today. Technology is helping us customize information in ways that are so much richer than what you could find in any employee booklet.”
Kevin Lemay, director of pension and benefits at Intact Financial Corp., notes the importance of a simplified experience when plan members sign onto a platform. “Being a technology company, we invest a lot of time and money to make sure our platforms are user-friendly. We expect the same from our providers,” he says.
Having an app makes a big difference for Intact employees, Lemay adds. “Now, they just click a picture and instantly submit a claim.”
Access to eligible providers and their ratings is also a very helpful feature, according to Lemay. “It has taken the apprehension and frustration out of the experience.”
A company with 11,000 employees, Intact recorded 61,000 visits and 14,000 claims through its provider’s app in 2017.
Last September, Sun Life also launched Ella, an interactive digital coach that aims to help employees make the most of their benefits plans. Dougherty calls Ella the Siri of the insurance industry. “Ella is capable of reaching out to plan members in a very personalized way. For example, Ella could tell you that you haven’t been participating in a pension plan and missed out on over $4,000 of employer match last year. Click here, and Ella can fix that. Or, there’s $300 in your [health spending account], which will expire in 20 days. Make sure you use it for a pair of glasses or massage. Or, your son is turning 21 and will be coming off the benefits program. You might want to consider private health insurance for him.”For its part, Manulife has adopted Amazon.com Inc.’s digital personal assistant, Alexa. Callaghan notes the benefits of allowing plan members to receive answers to common questions about their plan usage without having to pick up a phone, talk to a person or visit a website.
Great-West Life, too, hopes to offer more convenience and immediacy with a new virtual health-care pilot project it launched in partnership with Dialogue last December. “Employees can connect virtually with a team of medical professionals anywhere, any time,” says Fedorchuk. “Via secure video consultation, these professionals can diagnose several conditions, provide medical advice, make referrals to specialists or write a prescription. It can save plan members hours of waiting in a doctor’s office, especially for non-urgent care.”
In Dialogue’s experience, it’s possible to resolve the reasons for 70 per cent of doctor’s visits through online consultations. “So if your child develops an ear infection and you know that, why wait an hour in a clinic with a restless kid when you can have that resolved virtually in 15 minutes and have a prescription online?” says Fedorchuk.
On the pension side, Great-West Life has also piloted an online platform called Wayfinder, which allows plan members to view their workplace retirement plans, alongside their individual savings, in order to get a big-picture view of their financial progress. Fedorchuk says about 40 per cent of the people who weren’t maximizing their employer match are now taking advantage of it. “It’s a great example of how aggregating information and representing it easily, visually and in a personalized way works.” The company is planning to launch the Wayfinder platform this year.
Closing the treatment gap
Back on the health side, Green Shield Canada launched a free digital mindfulness program in December 2017. Through its six modules, the program allows people to get evidence-based mental-health support at their convenience.
David Willows, Green Shield Canada’s chief innovation and marketing officer, says the program wasn’t the result of a eureka moment. “It was a slow build. We looked at our data and saw mental health was a problem to reckon with in Canada. And we severely lack adequate resources on the ground to treat people. We don’t want to bypass the traditional system. But if it isn’t stepping up, here’s a creative and convenient way to close that gap.”
While Willows sees promise in the various technologies, he says staying atop the gadgets race is only a short-term solution. “I’m not sure how game-changing a new app to book a massage appointment really is. Our more earnest effort is to address the gaping holes in our health-care system, like the gaps in mental-health treatment or the lack of accountability for health outcomes.”
Green Shield Canada, he says, is taking affirmative steps in that direction. “Take our value-based pharmacy platform, for example, where Canadian pharmacists — if they have GSC plan members — now get a monthly scorecard telling them how they did on certain health outcome metrics. To me, that’s more disruptive and innovative than asking Alexa what my health-care spending account balance is. We need to think bigger and more strategically.”
With that bigger picture in mind, Manulife has rolled out five new pilot projects that focus on three key aspects of the health-care cycle: access to care, diagnostics and treatment. Four of the projects have an explicit focus on mental health and include virtual cognitive behavioural therapy and pharmacogenetic testing. The fifth focuses on the treatment ecosystem and pushes for a holistic, multidisciplinary approach to assessing and treating musculoskeletal disorders. It also includes the support of a care co-ordinator.
To address Canada’s growing mental-health crisis, Sun Life is also piloting a virtual cognitive behavioural therapy program in partnership with the University of Regina.
While front-end user experience is driving much of the innovation in the insurance industry, convenience and ease of use aren’t the only applications of technology. Tim Clarke, president of TC Health Consulting Inc., says underwriting, fraud prevention and backroom operations are equally on the cusp of exciting change.
“From an underwriting perspective, change is already underway in car insurance. Through telematics, a device in your car measures acceleration and you get a discount for being a safe driver. The same concept can apply to your health insurance, disability insurance, life insurance,” he says.
There are exciting ways technology can also help streamline backroom operations, including claims processing, predictive analytics and fraud detection, or make them smarter by identifying trends and detecting patterns. Clarke offers the example of renewals of long-term disability policies. “You review not only LTD data but also analyze the [short-term disability] experience. Now, if you had a strong program analyzing STD and medical claims, you’d be better able to identify the risk of new LTD claims. That could substantially improve your renewal accuracy.”
Even with gadgets like Alexa, Google Home or Apple Inc.’s Home Pod, it’s not just the plan members who benefit, according to Chris Gory, president and employee benefits advisor at Toronto-based Insurance Portfolio Financial Services Inc. “They’re also great for small-business owners who don’t have a dedicated HR person and can help ease the burden for the small group plan administrator by answering basic questions people can find in their booklet but don’t bother to,” says Gory, who also has high hopes for blockchain technology and how it will affect data exchange, claims adjudication and information sharing.
Dougherty agrees investments in big data and artificial intelligence could have some very positive outcomes for plan sponsors and carriers. “Big data can allow you to see things and detect patterns you wouldn’t otherwise spot if you were looking at just one claim. For example, you might get four claims from a chiropractor on one day for a specific plan sponsor. That might not look unusual. But if you look across your database and see you got 100 treatments by that chiropractor on one day, red flags go off.”
The onslaught of change in the insurance industry also comes with a dizzying barrage of choices. There are thousands of startups clamouring to push their next big idea. However, it’s not just impossible but it can also be counterproductive to hop onto every bandwagon. Carriers and sponsors need to carefully determine what makes sense for their business and how to in-
corporate it into existing plans. “For example, if you’re in construction and your demographic’s average age is 55, you won’t have much uptake for a Fitbit,” says Gory.
Clarke offers some advice: “Don’t be bamboozled by new offerings. Step back and see if they fit into your program, make sense for your demographic.”
He adds: “There’s much interest in virtual and mobile therapies of all sorts — telemedicine, apps to support mental health, fitness, weight loss or diet. However, our plans aren’t necessarily built to cover a paid visit with a telemedicine doctor or an annual subscription to a mental-health app. But if done right, they needn’t necessarily raise the cost. If you can pay $200 a year to install an app that complements [cognitive behavioural therapy], you could put that under paramedical benefits for psychologists. If effective, $200 on the app might eliminate $500 on visits.”
With such rapid change in products and processes, plan designs need a facelift as well. “Sponsors need to redefine coverage to let people access care the way they want to,” says Clarke. “You could look at these apps as an entire class of paramedical benefits and not limit coverage to specific vendors. Accept any app that meets specific criteria or select a category and allow any vendor that caters to it.”
As technology evolves at lightning pace, it can be a real challenge for plan sponsors to pick a partner that will stay through the length of their plan cycle. That’s a guarantee that would be a challenge for most startups to offer. “But current annual plans don’t lend themselves to that kind of agility. Sponsors like to build in two to three years of consistency to evaluate how a feature works,” says Clarke.
“Employers need to get a bit more experimental and be ready to adapt quicker than two- to three-year cycles [and] maybe even consider adding a program midyear,” he adds. “Startups, too, need to recognize they’re catering to a world that likes stability. Their business model cannot change three times during a plan year, once a plan sponsor starts communicating the program to their employees. Both sides need to learn to work with each other.”
Employers, according to Clarke, also need to evaluate existing plans with the same rigour they apply to new ideas. “If you decide virtual care offers better [return on investment] than massage therapy, you need to actively consider it, rather than be rigid about changing anything you’ve been offering so far.”