Digital is key to building resilience for health insurers

The Covid-19 pandemic is an insidious enemy spreading fast around the world. Governments are enforcing lock-downs, curfews and other drastic measures to tame it, as scientists toil round the clock to find a vaccine.

The pandemic’s trajectory is unpredictable. As such, the main focus now is flattening the exponential curve of infections through public health measures including social distancing.

In the meantime, Covid-19 is dramatically altering every single aspect of our lives. Fact is, we have to accept things will never be the same again. How we interact, socialize, work, play, learn, worship, has changed forever.

It is hard to predict the full impact of Covid-19. However, like every other sectors of the economy, the insurance industry will certainly be impacted in many ways, especially if the number of infections continues to rise exponentially.

A recent report by Deloitte reveals that the biggest dilemma facing insurers at the moment is how to minimise disruption to businesses and clients. How to keep afloat and retain clients.

The economic outlook further complicates issues. The International Monetary Fund (IMF) is warning that the new coronavirus Covid-19 pandemic may trigger a global recession in 2020.

Although it is tempting to paint a bleak picture of the industry's prospects, a far better approach would be to explore how insurers can cope with the prevailing situation in order to safeguard their financial health and sustain client relationships.

Covid-19 will fundamentally redefine how medical underwriters manage the value chain, and most importantly, relationships with customers as well as key business processes.

As a matter of urgency, insurers must be part and parcel of ongoing efforts by the government to stop further spread of the disease since it affects both existing and potential clients. This includes ensuring that interactions with clients limit the spread of the virus.

This is also an opportune moment for medical insurers to scale up the efficiency and productivity of their value chains, to meet the ever-rising expectations of their clients.

As they say, never waste a crisis. The Covid 19 crisis offers a window for health insurance providers to ramp up their digital capabilities so as to survive the present challenges and more crucially, position their businesses for rapid recovery in the post-Covid era.

Of course, digital health insurance is nothing new. It has been around for a while and many insurance companies have embraced technology in virtually every aspect of their value chain - underwriting, distribution, products, claims, customer and processes.

Of importance now is for medical underwriters to shift to a fully digital business model so as to be more efficient and responsive to client needs and expectations. By this I simply mean moving from traditional ways of conducting medical insurance business manual to a more agile and engaging approach to the customer relationship along the entire value chain.

Only a full shift from manual mode to digital and automated processes can deliver this transformation. It is not about acquiring expensive software the latest software but re-shaping the underlying business mindset and processes.

But first, medical insurers will need to deliver some quick wins to clients to cushion them from the financial vagaries of Covid-19. For instance, allowing premium payments in instalments will help ease the financial pressure on clients.

Underwriters should also be hesitant to terminate contracts with clients who have fallen back on their premium payments. Such empathetic commitments not only guarantee client retention (short-term) but also cultivates valuable client goodwill that underpins business sustainability (long-term).

Once this is done, medical underwriters should now focus fully on transitioning past this turbulent period into a new epoch of growth and sustainability, the impact of Covid-19 notwithstanding.

There are numerous benefits for insurers and clients in pursuing this model.

First, going fully digital will increase efficiency and reduce costs, thus making premiums more affordable, while generating more revenue for the underwriter.

Second, automating processes will help minimize claims-related fraud - a major headache for medical insurers - make it easier to track claims and reduce the claim settlement period. This leads to happier clients while cutting losses for the insurer.

Third, with social distancing as the new norm, underwriters will increasingly rely on online tools to interact with clients, unlocking creative ways of engaging customers.

Using digital apps, clients can track their medical expenses. Data analytics will help insurers understand their customers better thus ensuring products meet the actual needs and expectations of customers.

Fourth, there is a visible link between technology adoption and increased insurance uptake especially among the tech-savvy and youthful segments of the population.

This is perhaps the best time for insurers to create awareness of the importance of investing in one’s health and wellbeing. Taking out a medical insurance cover is one way of protecting yourself from the financial perils of illness.

In short, it need not be all doom and gloom for the industry. Instead, a crisis like Covid 19 should be as an opportunity for medical underwriters to emerge stronger and more resilient to take on future risks and challenges.

Meanwhile, let’s keep social distance and remain safe.

The writer is AAR Insurance Kenya Managing Director.