Asia Insurance Review and Verisk recently hosted a high-level roundtable discussion with the theme ‘Navigating Asia’s evolving health insurance landscape: Strategies for growth, inclusivity and innovation’.
Verisk global managing director – life, health and travel Rachel Edwards was joined by a select group of health insurance leaders that included AIA Group director of protection propositions and group integrated underwriting consultancy Andre Hermans, AXA Hong Kong and Macau medical director Alexander Chiu, Bupa Hong Kong general manager Yuman Chan, Eigengrey Consulting consulting actuary and adviser Greg Solomon, Hannover Re head of life and health digital business accelerator Lisa Balboa, Manulife Hong Kong Asia chief medical officer Detloff Rump and Peak Re head of underwriting L&H Limin Chen.
Demand-side pressures
The roundtable kicked off with a look at some of the factors stimulating demand for health insurance in Asia.
Mr Chan kick-started the discussion by noting that customers and segmentation are unique in different markets in Asia. “In Indonesia, a large portion of the population is still worried about basic needs. Is insurance on top of mind for this segment of the population? Maybe not.”
He suggested that insurers need to develop different products and propositions for each market. “It may not be full medical reimbursement products – in Indonesia microinsurance is taking off. It’s a very simple proposition that addresses affordability and gives customers a sense of security and protection,” he said.
Hong Kong is very different. “Why can’t insurers help the entire population with fit-for-purpose products and propositions? If we could get the young generation understanding insurance, buying it sooner when the premiums are more affordable,” said Mr Chan, “we could help close some of the protection gaps for this generation.”
Growing awareness
Mr Chen identified positives on the demand side. “On the product side, after the pandemic, many people saw the importance of having health insurance - and the special benefits it can have such as telemedicine, vaccinations and mental illness cover.
“The ageing population is a demand driver and is becoming severe in countries like Japan and Korea. In China it is also a hot topic. Some insurance companies are trying to revive these products for seniors,” he said.
To boost demand, Dr Chiu said that health insurance must always be dynamic. “In our product design, in our underwriting guidelines and even our claims assessment rules, we need to be as updated, as demanding as possible,” he said.
“While medical textbooks are reviewed every three years, our underwriting guidelines often take much longer to update. It would be beneficial for us to align more closely with the evolving realities of the healthcare landscape,” he said.
Ageing populations
Ms Balboa sees ageing Asian populations as the biggest demand driver.
“The number of people over age 50 is huge,” she said. “Older people are going to have chronic health conditions and people are going to live much longer, but probably with comorbidities,” she said.
This is where technology can be of most benefit. “Electronic health record data makes it easy for underwriters to offer these people new products like downscaled versions of the original product proactively,” she said.
Dr Rump also sees technology boosting demand. “We should make the change in how we cover people and not exclude them,” he said.
“Why do I say that? Because the technology allows us to do so. If you know you have a condition and you have a care pathway to get healthy, to manage it, then the risk is lowered,” Dr Rump said.
Ageing societies boost demand
Mr Hermans sees demand growth coming from the rapidly growing retirement space.
“Everybody worries about people until they’re 65,” he said. “All our pricing is to 65, corporate solutions insurance is still 65. What happens at retirement? Nothing happens,” Mr Hermans said.
“All of a sudden you don’t have any medical insurance anymore. You probably have a pre-existing condition, and now you need to buy individual insurance where traditional underwriting takes place. It’s absurd for two reasons. First, we’ve got no underwriting guidelines. Second, if I talk about critical illness, the definitions are 20 years old,” he said.
Mr Solomon suggested taking a step backwards to define the nature of the problem itself. “When we look at this gap, everything starts off as an out-of-pocket expense,” he said.
“Then national insurance comes along and takes a chunk of that away - then we have some private health insurance - some of the covers are optional. Should I go to a dentist or not? So dental cover becomes optional. Mental health is becoming an increasingly important part of that as well,” Mr Solomon said.
Cyclical problem
Ms Edwards emphasised the scale of the opportunity. “The problem statements are vast,” she said.
“To meet the high demand for comprehensive cover, an inclusive product approach must adapt to an environment of high inflation and rising medical costs. That feeds back into pricing. It’s very cyclical.”
Ensuring products are affordable and personalised can make them complex to administer during claims.
“Inclusivity is an important term but is has different meanings to different stakeholders within the value chain with insurers, reinsurers and distributors making product design complex. Achieving it isn’t easy,” she said.
Supply and pre-existing conditions
The panel then turned its attention to the supply side of the equation and Ms Balboa offered a word of caution on a cartel approach to health insurers handling customers with pre-existing conditions.
“Under an ageing population, the number of people with pre-existing conditions is likely to grow. Making a conscious effort towards ensuring access to insurance for these groups is very relevant because otherwise the regulator could step in. For example, in France, the removal of medical underwriting for certain types of mortgage life insurance cover led to a sharp increase in premiums for all customers, practically overnight,” she said.
Dr Rump is an advocate for personalised experiences. “There must be different solutions for different insureds and different pre-existing conditions,” he said. “The healthcare system is not geared up for preventative medicine.”
Mr Chan recommended defining the problem the industry is trying to solve as the first step. “If we try to digest the entire thing together, we’ll never solve anything. How do we measure? We know the ageing population is coming. Do we have enough professional services in geriatric care? Do we have the tools and technology to do home care?”
Using the latest data
Mr Chen pointed to supply-side technology problems. “If you want to make informed underwriting decisions for medical risks, one of the problems is that underwriting manuals are mainly based on medical research rather than insurance experience data. For most insurance benefits, especially critical illness, medical reimbursement, underwriting ratings derived from insurance experience data are important information to supplement medical research.
“With new technology like AI and digitalisation, we can try to translate this big data into the language that underwriting can understand,” he said.
Dr Chiu identified the supply problem of accidental misrepresentation.
“When I first joined AXA and I looked at the data, I realised that we declined a lot of clients with a history of familial hypercholesterolemia. Why did we have so many of these applicants? After I talked to the agent, I understood the problem. It’s because the question was interpreted as, ‘do you have family members with high cholesterol?’”
That is why data quality is so important.
Ms Edwards emphasised the importance of the integrity of the data. “The fundamentals are in the data,” she said.
“The quality, the volume and the ability to analyse the data to inform are critical. You need to include individuals to collect the data, to analyse and understand, and further refine underwriting and pricing. It doesn’t have to be an ‘all or nothing’ scenario.
“I love the thought of using other data sources, proxy data sources, to help inform an understanding of that individual as well,” she said.
Technology and AI
Leveraging technology to help health insurers close the protection gap was also addressed, with a specific focus on AI.
Dr Chiu emphasised the difference between AI underwriting and AI-assisted underwriting.
“AI will help alleviate or lessen underwriting work so that underwriters can focus more on complex issues, more human issues. We’re working on that. This is going to be a game changer in our industry,” he said.
Mr Solomon advocated more joined-up thinking. “There’s a lot of data that the insurance industry is not accessing and should demand,” he said. “We have health providers, doctors, clinics, X-ray facilities - and insurance is where they overlap. We are not interacting well.”
Being smart about data
Ms Balboa said, “There is a wealth of digital health data, electronic health record data, lab data where, as reinsurers and insurers, we can access this data with appropriate data-owner consent. There’s an opportunity to use this data to refine the underwriting approach.
“Digitally-available medical data can be used as part of the underwriting process to speed up time-to-issue of insurance policies by reducing the number of additional medical tests a customer needs to undertake where recent electronic health information is already available,” she said.
Turning to AI, Mr Chan said, “AI is not entirely new. It’s how we process larger amounts of data and produce valuable insights through pattern recognition and machine learning. It’s the evolution of capturing and using more data. The question is, how do you digest and make use of that data? We talk about personalisation - but it is real? Where do we get to the point where we truly can have a personalised solution for what my needs are and what my family’s needs are?”
Dr Rump made it clear that we are only at the start of the AI learning curve. “AI is an evolution,” he said.
“We’re not using it enough. I read something the other day saying insurers should be technology companies that also sell insurance. It took me a while to understand this, but I think that today technology is the single most empowering force in insurance.”
Is that a fail?
Mr Hermans is an advocate for AI. “I absolutely believe in AI,” he said. “I’m not sure that everybody has the right concept of AI as it relates to underwriting and personalisation in insurance. I’m a bit of a sceptic from an insurance point of view, because we are not tech companies. We talk about technology and cost savings and efficiency, but that personalisation of insurance solutions is expensive.”
“Personalisation in medicine might involve genetic testing for anti-depression drugs or chemotherapy treatments. That becomes incredibly expensive. Someone’s going to have to pay those costs for these options covered by a personalised insurance offer.”
Mr Chen sees that AI can offer significant cost and time savings.
“Already in the market we have very good systems but perhaps in the future we can have still bigger potential improvements to this kind of system. For example, AI could read medical reports or very long medical histories. AI can identify the main risk factors and use automated underwriting to deal with these very complex medical cases. It has great potential,” he said.
“Maybe in the future we can incorporate more nontraditional underwriting variables like retinal scans. If agreed by clients, we can also incorporate this in automated underwriting systems to try to solve more complex cases in the future,” Mr Chen said.
Data privacy
The issue of data privacy will also have a bearing on how health insurers leverage technology.
Ms Edwards said, “There’s been lots of discussions over the years about whether people are comfortable sharing data, whether they’ll do that where there may be a perceived disadvantage from a pricing or an access perspective. But there are studies where if someone feels there is an incentive and response to sharing data, they’ll get it.
“I don’t think it’s individuals themselves that are a big barrier to accessing that data. If there is a fundamental trust and belief, it’s being done to support health and wellbeing, support better product and pricing, or ultimately increasing access to healthcare,” she said.
The growing sets of big data might have some inherent bias, however.
“We’ve talked about the ageing population and data that can help inform risk and underwriting,” said Ms Edwards, “but different age groups do different things.
“Not everyone’s wearing wearables. Not everyone’s using the technology that accesses data sources. I’m not saying we should eliminate it as a source, but we do have to recognise that we’re still only accessing certain cohorts and certain risk types through certain data sources as well,” she said. A