Insurance, much like home decoration and gardening, is one of those things that no one likes but everyone has to do.
It is time consuming, costs you money, and there is very little gratification to be had with the end result. Until you need it, that is.
Yet, in a world of stagnating wages and high debts, many are seeking cheaper immediate options and hoping they don’t have to make bigger payouts later on. However, as this article will explain, tech is coming to save the day, making insurance less painful and easier to navigate than ever before.
Health insurance, a scary necessity
Health insurance has largely been made scarier due to the rising reliance on High Deductible Healthcare Plans (HDHPs). These plans mean lower monthly costs but, in the case of a medical emergency, well – you better hope you have savings to help you out. Studies show that, increasingly, employers are offering HDHPs as workplace plans to save money. In fact, in 2015, 24% of employees were enrolled on such a health plan, a 300% increase from 2009.
This is troublesome, because HDHPs actively put people’s health at risk. In a phone survey by Thomson Reuters, some 2,400 households (out of 12,000) admitted to delaying treatment due to concerns of high deductible costs attributed to being enrolled on a HDHP plan. And it is really no surprise that they are worried. The risk of financial devastation due to the impact of healthcare has also been soaring. Healthcare costs rise up to five times faster than general inflation and eat away at both business revenue and household gains. Many are just one hospital stay away from financial ruin.
Tech will touch health insurance
Technology has had a huge impact on all variety of industries. Automation has decimated jobs across manufacturing and services sectors, but has also benefited consumers. Now, finally, health insurance is starting to fit into this pattern too.
According to research from banking giant Morgan Stanley, insurers are increasingly – due to digitization – cutting out the middlemen and interacting directly with consumers. This, in turn, is reducing costs for scores of consumers. If anything, the future of brokers, those costly middle men and women, is most at risk. As people better understand and have access to the insurance market, the better deals they will be able to find for themselves and their families.
Startups like Oscar, for example, are following this trend and disrupting the health insurance market by leveraging technology to make it easier for consumers to buy their own insurance. Companies like these are making the most of data and analytics – like other businesses in other industries before them – to provide customers with the lowest costs for health care insurance premiums within their immediate geographical location.
Emergency healthcare trends
One trend that is increasing with the digitization (and democratization) of healthcare insurance is that of emergency healthcare cover. Plans like these are perfect complements to HDHPs and are made possible by technology’s growing takeover of the insurance market. This is because these relatively new trends are more accessible than they have previously been.
Generally speaking many health insurance policies do not provide cover that is adequate in the case of accident or critical illnesses. Rather they focus on traditional products that, now, digitized insurance services are starting to focus on. However, these seemingly fan-dangled insurance products complement regular insurance policies by providing a cash benefit that is available for any out-of-pocket costs related to a covered illness or accident. Including accident and critical illness insurance, emergency options are growing at a double-digit rate – estimates suggest they will be worth $2.7 billion in sales by 2020.
Overall, digital insurance marketplaces are leading this new approach. They are supplying struggling consumers with opportunities to mitigate risks posed by the onset of a serious illness, or a sudden accident.
By putting the power back into the hands of the consumers who are searching for their own insurance – rather than having them communicate through mediums such as brokers and brick n’ mortar businesses, the opportunities are now, finally, increasingly positive.
• Thoughts or comments? Please visit this thread: Guest article: Digitization’s impact on health insurance
Wes Thompson is a 30-year veteran of the insurance industry. He is currently the founder and CEO of emergency medical insurance startup Emerge, a Rokk3r Labs portfolio company. Previously he served as president of Sun Life Financial and as a division president for Lincoln Financial Group.
