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  • March 2023
  • 5 minutes

Digital Health and its Impact on the Growth and Profitability of the Health Insurance Sector

  • Dr. Dennis Sebastian
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Digital Health MEIR 030123
In Brief
Digital health is here to stay and will continue to grow. Enabling virtual access to healthcare can empower policyholders to actively manage and improve their own health and wellness, while equipping insurers to optimize portfolio management and performance.

A recent report from the business intelligence market research firm Grand View Research valued the market at $211 billion in 2022, and projects it will expand at a compound annual growth rate of 18.6% between now and 2030.

COVID-19 turbocharged many of the global digital health trends that were already underway prior to the pandemic. The urgent need to meet fast-rising care needs while maintaining social distancing protocols gave healthcare providers and insurers a strong appreciation of how remote healthcare could fill a needs gap and how integrating providers into an ecosystem could enhance health management.

In the Middle East, digital healthcare has been establishing a firm base. Governments in Dubai, the Kingdom of Saudi Arabia, and the UAE, have established integrated health information exchange (HIE) platforms, which are connecting clinicians and other healthcare providers and insurers, unifying individual electronic medical and healthcare records, and simplifying filing, assessing, and paying of claims.

What is Digital Health?

Digital health is “the application of information and communications technology to provide accessibility to interventions to prevent disease and improve quality of life.” For insurers, digital health also encompasses managing cost of care.

Digital health encompasses a range of technologies, including mobile health (mHealth) apps, electronic medical records (a patient’s digitalized clinical records), and electronic health records (digitalized records of all health services provided to a patient). They also encompass data from health-focused wearable devices and digital therapeutics, telemedicine and telehealth (which includes non-clinical services) as well as personalized medicine.

All of these inputs ultimately produce structured and unstructured experience data that can provide insurance industry analysts and data scientists with the raw information needed to develop health and cost management solutions to improve patient health and insurer financial outcomes.

Impact of Digital Health Initiatives on Health Insurance Growth and Profitability

Health insurance value chain improvements are generally driven, at least in part, by insurtech initiatives, but they need to integrate with digital health initiatives for better data-driven customer management and health outcomes.

The migration of the health insurance value chain toward an integrated framework is becoming necessary for insurers seeking to remain aligned with digital health.

Digital health solutions in the Middle East are making available experience data on a real time basis right from the point of care. This is likely to have a profound impact on the health insurance industry overall. Focusing on how customers and companies interact, prioritizing the customer experience over profitability and commissions, and accepting that one-size-fits-all products that do not fit current customer expectations and lifestyles, are no longer enough. Business models focused on customer-centricity, flexibility, and transparency will be key future drivers of sustainable growth and success.

The industry needs to move toward real connectivity. At the center of this move, increasingly, must be the internet of medical things.

  • Distribution and Marketing

    For individual and SME groups, digitalized direct-to-customer distribution and product marketing via a well-designed and visually attractive customer experience interface may make it easier for insurers to engage directly with their customers in ways that may benefit both insurers and policyholders by improving customer health management, strengthening insurer retention, and stabilizizing portfolios.

  • Product Development, Pricing, and Underwriting

    The abundant, detailed experience data from wearables, digital therapeutics, and more is enabling actuaries to incorporate psychographic parameters such as personality, hobbies, attitudes, values, and likes and dislikes into their risk modelling analyses, alongside demographic parameters such as age, gender, nationality, and occupation.  Such an approach may ensure more accurate customer risk assessment and may also support the development of more personalized products and services.

  • Claims Management

    An insurer’s claims management IT platform that integrates with a provider’s digital health framework for real time claims monitoring through an algorithm-enabled analytic tool can likely decrease overutilization. In addition, a digital payment gateway to enable settlement of eligible claims at the point of service may reduce abuse and waste.

  • Customer Management
    Insurers can digitally empower policyholders by providing digital health apps that enable behavior change. Members can, for example, be incentivized to reserve in-person hospital visits only for acute and emergency medical care needs and use remote capabilities for treatment of primary care and non-acute conditions.

    Proactive engagement with members can also ensure maximum utilization of available mHealth services and rewarding outcomes based on pre-agreed key performance indicators.
At RGA, we are eager to engage with clients to better understand and tackle the industry’s most pressing challenges together. Contact us to discuss and to learn more about RGA's capabilities, resources, and solutions.

Optimizing HIE Platform Use

For insurers, collaborating with physicians and service providers will enable the development of business models that can elicit better engagement for all participants as well as enabling stronger data analytics.

Some aims can include:

  • Identifying at-risk patients early, including those with chronic illnesses, and helping to personalize management of care
  • Developing algorithms to enable accurate diagnoses of common illnesses
  • Applying deep learning models for remote diagnosis capability for common conditions such as skin lesions and ear infections
  • Developing clinical care pathways that are applicable locally
  • Optimizing revenue management
  • Cross-selling value-based and protection-based products and services

The focus of any digital transformation strategy by health insurers should be to enable sustainable growth and profitability via:

  • Increasing digital health engagement through product-driven initiatives
  • Improving adherence
  • Improving health and wellness
  • Lowering comorbidities
  • Reducing the impact of inflation
  • Improving customer mental health and chronic disease management
  • Reducing claims frequency and severity, thereby improving claims ratios

All of these will not only strengthen products and pricing, they will also help improve population health and reduce the a country’s economic burden from health-related needs.

To The Future

Digital health is here to stay and will continue to grow. Enabling virtual access to healthcare globally via data-driven care pathways and tools for multiple common illnesses, as well as remote monitoring, treatment, and medication management capabilities, can empower insureds actively to manage and improve their own health and wellness, which can, in turn, improve insurer portfolio financial management and performance. Health insurers would do well to develop digital transformation strategies that can move these goals forward.

Reprinted with permission from the Middle East Insurance Review.

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Meet the Authors & Experts

Dennis Sebastian
Dr. Dennis Sebastian

Vice President, Head of Health, RGA Middle East