Added-value services that promote health and prevent disease will lower claims costs for insurers, in addition to being a source of innovation, competitor differentiation, and an improved reputation for promoting social good, accordingto GlobalData Financial Services.

Engaging in health and wellness is an opportunity for protection insurers: those that do so will benefit from lower claims costs and higher customer engagement with protection products, which in turn will mean higher profits.

Insurers have a choice. They can either invest in individuals to promote health and wellbeing and prevent illness, injury, and death in an effort to reduce claims costs, or continue business as usual and pay claims as they arise, with no effort of intervention.

The choice should be a no-brainer. Insurers have an opportunity to innovate and differentiate their services by moving towards claims prevention.

Engaging in health also puts insurers in the stronger position of promoting social good outside of purely providing financial compensation. This is also a chance to improve the insurance industry’s reputation, with trust and consumer engagement currently low.

One of the main barriers to protection insurance uptake is that consumers are uncomfortable paying for a product they might not need. Providing customers with a

range of added-value healthcare services, rewards, and personalized cover is therefore a way to address this barrier. Customers need to feel as though protection products and services are so useful and valuable they become worth paying for.

Rewards can play a part here, with Vitality for example rewarding customers with discounted access to goods and services for leading a healthy lifestyle.

Providers are also partnering with added-value services such as virtual GPs and developing wellness apps.

There is, however, scope to think further outside of the box for added-value services.

Insurers should look to see how they can become holistic lifestyle brands. For instance, in the US some insurers are partnering with the personalized meal planning company, PlateJoy.

The company has launched a nutrition plan especially designed to prevent diabetes, funded by health insurance plans.

There is potential for insurers to help individuals plan for the end of life. Insurers could also help customers manage taking their medication through tracking and notification apps.

Investing in healthcare technology and disease prevention, detection, and management is another avenue insurers could explore.

Recent healthcare technology developments include implants that detect cancer in the body and cause a small artificial mole to appear on the skin as an early warning sign. It is about catching illness early and getting customers faster access to healthcare.

In conclusion, moving towards prevention is the way forward for protection insurers. Those that do not will lose competitive advantage.

The Insurtech industry has seen record-breaking levels of investment over the past few years, so it might’ve been expected that the curve would taper off and investment levels would fall.

However, GlobalData Financial Services explains that does not seem to be the case, particularly after Eos Venture Partners’ recent announcement.

Willis Towers Watson reported that 2017 saw the greatest level of investment in insurtech companies by insurers and reinsurers to date.

When new industries emerge there is often an initial period of high investment, as new propositions are explored and entrepreneurs seek to revolutionize the market.

This is typically followed by a period of consolidation, during which the levels of investment become much more modest as startups refine their business propositions.

With 2017 being a record year for investments it would not seem unreasonable to assume a lower value of investments occurring in 2018.

Yet Eos Venture Partners, a strategic venture capital fund focused on the insurance industry, has announced its intention to raise a $100m fund that will target early and growth-stage start-ups.

Eos Venture Partners has a track record for investing in some of the most disruptive and forward-thinking insurtechs, such as:

• Neos – A connected home insurance provider that aims to use technology to prevent claims
• Laka – A cycling insurance provider that utilizes a pooling technique to reduce costs for customers
• Digital Fineprint – Utilizes data analytics to improve customer targeting

With Eos Venture Partners’ track record for investing in some of the most forward-thinking start-ups, and the announcement of a $100m fund, 2018 is likely to see further disruptive innovation in the insurance industry.

B3i, the blockchain consortium made up of 38 leading insurers, has announced it is to become a company, allowing it to legally sign contracts, raise capital, and distribute its platform to global insurers and reinsurers.

This could prove to be a turning point, transforming blockchain in insurance from a few case studies to a key platform.

The group had created a working blockchain prototype in 2017, for applications to be tested on.

This was seen as a significant step forwards, as it enabled tech companies to trial products in a working environment for the first time. This prototype proved that the technology could enable insurers to save as much as 30% of their time on administrative tasks.

While blockchain remains at the prototype stage for the UK insurance industry, there are prominent examples of how it is already being used around the world.

The Chinese market is particularly advanced, which was highlighted in March 2018 when Huawei announced it had signed a partnership with Che Che Technology and Hai Lian Jin Hui to create a blockchain-enabled platform for insurance innovations.

It is to be built via Huawei’s cloud and will be open to insurers that are existing cloud members as well as new groups, which will be able to add insurance products to the platform.

Furthermore, China Construction Bank announced in September 2017 that it is launching a blockchain application specifically for its bancassurance channel.

It is attempting to improve the customer experience by increasing transparency and reducing processing times. Technology company IBM is providing the technical side of the project.

Outside of China, there have also been examples in the US, notably from insurance start-ups. One emerging market that blockchain is impacting is the home sharing market, after housing rental start-up Bee Token partnered with financial services platform WeTrust, in January 2018, to offer decentralized insurance for security deposits.

The two start-ups will share information with each other over the digital ledger and incentivize good behavior among users by providing their data on trustworthiness and creditworthiness, with the aim of reducing the insurance cost for property damage.

Despite a reasonably high level of hype around blockchain and its applications in insurance, case studies remain relatively sparse. However, the number of working examples are undoubtedly picking up.

Cases to date have come from both global insurers and technology companies, such as AIG and IBM, to start-ups in niche markets, indicating that blockchain can have an impact across the whole industry.

The news that B3i is to become a company suggests that more substantial moves are on the verge of happening in the global market, with a range of leading insurers invested in the former consortium.

January 2018
Amazon announced its collaboration with Berkshire Hathaway and JPMorgan to create a healthcare company to serve its US employees.

Apple updated its health app, enabling US customers to see their medical records such as allergies, conditions, immunizations, lab results, medications, procedures, and vitals on their phones. This was designed to facilitate the relationship between customers and medical centers. Apple already has a range of wearable tech: the Apple Watch.

February 2018
A month after Amazon’s announcement, Apple announced that it is preparing to launch a network of “AC Wellness” medical clinics for its employees and their families in spring 2018.

March 2018
Google’s sister company Verily has reportedly been in talks with insurers bidding for health insurance contracts. Notably, in 2016 the company proposed a joint venture with Oscar Health.

The race into US healthcare among alternative providers has truly begun, but each has a different approach.

Amazon has opted to tackle the healthcare market using its power as a large US employer to drive market change, such as lowering healthcare costs and improving services for employees.

Apple seems to be concentrating on creating a more connected service between customers and healthcare providers. It is positioning itself as a potential partner for healthcare providers and healthcare insurers.

Google, which is still feeling out the market, is looking for partnerships. It may likely see itself in the role of an insurance distributor.

Alternative providers are highly influential brands, have masses of consumer data and resources, and are known for providing exceptional customer experiences. While they are seen as a threat, partnering with these providers could also be an opportunity for the insurance industry.