This is placing public health systems under increasing strain in many countries. In response, customers are turning to private providers for faster access to care and ongoing support.
Customers today are markedly different from traditional health insurance holders.They are more digital, more selective, and more focused on value. In short, they expect their cover to deliver benefits that clearly outweigh the cost. As a result, they are becoming more open to new products and propositions that address their increasingly complex care needs.
This is impacting how customers purchase health insurance, how they engage with it and how they claim. In particular, insurers are increasingly using digital channels across their well-being programmes and everyday customer interactions. Digital health is also no longer limited to attracting and retaining highly active, healthy customers. Services such as virtual GP access, guided mental healthcare, physiotherapy, and smart-device nudges help insurers
build ongoing relationships with customers across a wide range of health needs. Importantly, these tools also support preventive and early intervention strategies that create value for both customers and insurers.
These tools can improve customer health while reducing claim severity and frequency for insurers through proactive prevention and earlier intervention.These tools are also moving insurance beyond a one-size-fits-all model.The industry is shifting away from generic digital health services with low usage and limited relevance toward more personalised support tailored to customers’ specific health needs. Finding ways to use AI to connect customers with tailored digital and health services helps them see more value in their cover and makes them more likely to stay with their insurer over the long term.
Analytics for profitable growth
Insurers have made strong progress in expanding participation, but the next challenge is retaining the right customers – those who represent good risk – and predictive analytics is key to achieving that. Digitalisation is generating far more data for insurers, while personalisation relies on advanced analytics behind the scenes to determine contextually appropriate actions for different customer groups. Machine learning and other sophisticated analytics now provide more granular insights, helping insurers to identify high-value segments that traditional one-way, two-way or linear analyses may miss.
At the same time, insurers must assess whether particular target customer groups align with their growth strategy and are likely to deliver sustainable profitability.The business mix needs to align with pricing assumptions, and both customer mix and claims performance should be closely monitored to ensure it is tracking in line with expectations. Robust dashboards and analytics strategies will be essential to spotting warning signs early and identifying profitable opportunities to expand market share.
Proposition development is also becoming increasingly customer- and segment-specific. Women’s health and metabolic health are examples of growing focus areas for targeted propositions. Products are also being shaped around distribution channels, such as digital platforms designed to appeal to younger, digitally-savvy demographics.
Data-driven innovation improving access to new treatments
Emerging medical technologies and treatments across areas such as cancer, cardiovascular disease, and neurodegenerative diseases are highly promising. However, building enough value-based evidence across a sufficiently large population takes time.
Insurers need this insight to identify which customer groups benefit most relative to cost and to ensure the right treatment reaches the right customer at the right time. In product development, supplementary riders are creating access to new technologies and treatments while helping protect the core book from rising medical inflation. Instead of offering costly new treatments across the entire portfolio from the outset, insurers can ring-fence them as optional add-ons that customers choose to buy.
This approach allows insurers to build data on outcomes, value and the cost-effectiveness of new treatments while also making them available to customers who want access without impacting the sustainability of the traditional health insurance book. As medical science becomes more personalised, diagnostics and treatments are becoming more personalised as well.
The next opportunity lies in combining personalised diagnostics and treatments with more personalised propositions enabled by AI and digital transformation. Bringing these together could help insurers develop products that put cutting-edge treatments into the hands of the customers who need them most.
Meanwhile, pricing and claims monitoring can be strengthened through more sophisticated modelling techniques, such as GBMs, and through dynamic portfolio management approaches that support innovation. Insurers also need to equip pricing teams to deploy the machine learning models they build more independently, reducing reliance on IT when new rating factors emerge. One of the most promising areas of innovation is where pricing and claims intersect, particularly in preventive care and early intervention.
The convergence imperative for health insurers
Partnerships between insurers, digital health providers, hospitals, care providers and technology platforms are likely to play a central role in the future of health insurance.What does that mean for a health insurer of the future? To succeed, they will need to deliver more joined-up care by bringing together the best of healthcare and technology.
That will require insurers to make better use of data. Importantly, this depends on building customer trust, managing the data securely and being transparent about how it is used.
Agentic AI is another emerging force. As it begins to help customers compare and buy policies based on evolving healthcare needs, insurers may need to adapt to new technology-driven distribution channels.
The industry will also remain focused on sustainability. Because premiums need to adequately support claims, affordability for customers is a critical part of that challenge. Insurers need to grow sustainably by attracting the right customers, controlling costs, improving health outcomes and lowering claims costs over time. A key component of this is closer collaboration with providers. Historically, this has been difficult because payors and providers have worked to different priorities and performance measures. Even so, the time is right for stronger payor-provider partnerships.
Insurers that stay passive will face rising loss ratios, worsening affordability and declining relevance. In contrast, those that take an active role will help define the future of global healthcare.
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