Insights from Wellthie
By Sally Poblete
Consumer expectations have decidedly pivoted towards an e-commerce experience that guarantees value. Yet, in spite of the high level of complexity, health insurance seems to have remained the exception – until now. Below are three lessons health insurance incumbents can learn from the auto insurance industry to better meet customer expectations, boost sales, and ensure long-term competitiveness.
One price doesn’t fit all
Auto insurers like Progressive, Allstate, and State Farm are using the Internet of Things (IoT) to monitor behavior – driver habits, changes in speed, how often they drive, and the time of day they drive with the expectation are just a few examples. The hope is that doing so reduces costs by more accurately pricing driver risk. For consumers, this is a strong incentive to drive well and maintain lower premium rates.
This behavior-based model is a great example for health insurance companies in their product and pricing models for health plans. Walking 10,000 steps a day, getting an annual checkup, and other health-related behaviors can be a good indication that overall health can be incorporated into innovative behavior-based health insurance products.
This is particularly appealing to millennials, for whom wellness is a daily activity. Recent Goldman Sachs research indicates that millennials are exercising more, eating better, and smoking less than previous generations. This generation is using apps to track training and nutrition data, all of which can be incorporated into risk assessments to help insurers stay competitive. This data also presents insurers with more opportunities to incentivize healthy behaviors by rewarding members who reach certain milestones.
Insurance shopping has to be an online experience
Insurance is complicated, and there are many factors that go into understanding the value of coverage. For consumers, choosing the best plan for your needs is much simpler when marketplace comparisons can be made. In the auto insurance world, such comparisons exist. For example, NerdWallet allows users to compare quotes from multiple car insurance companies at once. Comparing exactly what is being offered – and at what price – simplifies the process of choosing a provider and plan.
Similarly, consumers would greatly benefit from health insurance marketplaces where they can get educated, view quotes, and enroll in plans within minutes. Easier-to-understand product information, reviews, and price comparisons should guide the transition to a marketplace model for the health insurance industry. Considering that we may soon see more short-term plans and association health plans (which are not as comprehensive) alongside standard plans, it is especially important for consumers to understand exactly what they are purchasing and what services will be covered. An e-commerce platform would help ensure that consumers are actually comparing similar plans that will provide them with what they need.
Empowered agents can make personalized recommendations
Auto insurance companies such as Goji and CoverHound operate data-driven platforms that help agents match customer needs with the correct coverage through integrated networks of insurance carriers. In the health insurance industry, there is a similar opportunity for carriers to enable their agents to find more personalized options for customers at a fraction of the time it typically takes.
Brokers add value to the health insurance experience of many consumer segments, and there is a lot more agents can incorporate into their recommendations through technology. For example, a small business owner in the retail industry might want to know what other similar companies in the area have purchased based on their demographics. Through better use of data at the point-of-sale, a broker should be able to make those suggestions with ease.
Streamlined e-commerce experiences and improved value are key for consumers across industries, including health insurance. Health insurance providers would benefit from incorporating things that the auto industry has been doing well already — using technology to incentivize healthy behaviors, having easy-to-understand information available on marketplaces, and utilizing data to help agents show personalized offerings.
Sally Poblete, Wellthie founder and CEO, recently discussed the evolving role of the benefits broker, and how insurtech solutions like Wellthie can positively impact their future.
Contact us today to schedule a demo and learn how Wellthie can help maximize your small group sales.
As debate continues to swirl about the future of U.S. healthcare regulation, here are the four high-level trends we may expect, and how stakeholders could be affected:
1. Healthy people may start leaving the individual market
Recent changes eliminate the penalty for not having health insurance. Under the ACA, consumers were charged a penalty for the year they lacked coverage. But now, when consumers file their taxes, they won’t be charged a penalty. Without the penalty, younger and healthier consumers may choose to not have individual coverage. However, this doesn’t mean they don’t need or want health insurance coverage. Expect employers to play an increasingly important role in filling the gap. That being said, not all employers offer health insurance. It’s still ambiguous what the self-employed (think contract, freelance or gig workers) will do. Under the likely scenario in which many of the self-employed forgo insurance under the new regulation, the uninsured rate may increase.
The premiums received from healthy people are generally a great hedge for the unhealthier, or higher-risk, populations for carriers. With the changes occurring in the individual market, carriers can expect a worsening loss ratio: The ratios paid by the premiums to the insurance company to cover settled claims begin to decrease. With the risk pool looking worse, carriers may concentrate on boosting their sales in relatively more stable segments.
3. Employer-sponsored coverage will be critical for employee retention
If the ACA’s employer mandate is repealed, small businesses may no longer be required to provide affordable, minimum-value coverage to their full-time employees to avoid penalties. That being said, with many people losing their individual health coverage, employees may increasingly expect health coverage from their employers. Employer-sponsored benefits have always played a critical role in attracting and retaining talent, but, with the current instability in the market, many employees will appreciate the security of an employer-sponsored coverage plan more than ever.
4. States may have increasing regulatory power
States may gain further flexibility to develop new healthcare models, including changes to affordability and choices offered. A number of states are pushing for their own legislation that could potentially give additional protection to residents beyond the federal level. Keep an eye on states like New York and California, which seek to create programs to increase benefits and requirements set by the ACA.