Transforming Life and Health Insurance: Leveraging Pandemic Accelerated Data
In the last couple of years, the willingness to share data for life and health purposes has increased – accelerated by the pandemic. More governments are building data infrastructures that enable open health data API initiatives. These initiatives enable people to own, manage and provide access to their health data to trusted third parties leading to brand new sources of intelligence that insurers can use for operations. What is less known is that the health data contained in these APIs, also have higher predictive power than traditional wellness data (i.e., step-count, sleep), giving insurers the ability to create more diverse and inclusive insurance products that serve evolving customer health needs. Lydia.ai, formerly known as Knowtions Research, is a Canadian, applied AI company on a mission to insure the next billion people. We asked them about the changes, opportunities and their vision regarding open health data. Knowtions harnesses open health data sources and uses Lydia AI, its proprietary deep learning risk scoring engine trained on global health data, to generate precise health benchmarks that can accelerate underwriting and be used to develop new products.
Empowering people with open health data
Giving people the ability to access, control and share their health data will enable better health outcomes by empowering people to make more informed choices and giving healthcare ecosystems smart insights to serve its people better. For example during the pandemic, open health data enabled Taiwan to effectively distribute masks and vaccinations to its citizens. Another example would be Singapore, where their government helped using open APIs to establish contact tracing that controlled the spread of Covid-19.
Insurers can now predict health risks accurately at any given time
The main capability that open health data gives insurers is a new way to benchmark health that’s more representative of reality by predicting meaningful health risks at any given time. Insurers could no do this previously with tradition underwriting data because insurers only collected age, gender and basic medical declaration when the person applied for policy. Even with wellness data, insurers could not use step data to predict short to mid term health outcomes, for example, development of cancer, or other chronic diseases in the next 3 to 5 years in a 10 year policy.
With people living longer but struggling with more chronic illnesses, insurers need better ways to accurately benchmark health risks to meet customer’s needs. The ability to make accurate predictions at different time points based on the latest digital health data becomes critical to enabling 1) fluidless underwriting for remote sales and 2) new products that are more inclusive and offer dynamic benefits.
By leveraging valuable insights from alternative data sources, insurers augment their decision-making across the insurance value chain – from actuarial risk assessment to pricing to customer experience.
Personalizing customer experiences
The same dynamic health predictions can be used to personalize the insurance experience. By coupling intelligent health analysis with protection gap analysis, insurers can empower customers to make better, more informed decisions. For example, a customer with raised risks of cancer when compared to people like him may choose to buy cancer insurance earlier to ensure future protection. Lydia.ai thinks personalized experiences are about aligning insurers and customers around finding the best way to close protection gaps and build more prosperous futures throughout a person’s life.
Current trends with alternative data
New sources of alternative data and AI will fuel the shift to more inclusive insurance products that integrate prevention as a core part of the insurance product. What Lydia.ai has found using alternative data and AI is that the population is, in reality, much healthier than what’s expected from actuarial tables. When coupling that with advances in preventive healthcare, Lydia.ai is able to expand insurance eligibility and coverage. For example, an insurance product with extended eligibility age for seniors that features annual health checkups, and unique benefits at point of sale to those incentivized to continuously improve their health.
Lydia.ai envisions a world where health insurance will help people live healthier, car insurance will help people drive safer, home insurance will help people renovate smarter. They foresee a next generation of data-driven life and health insurance that enables and empowers you to create the best future for you and your loved ones. That’s the future of Pay How You Live Insurance.
Insurers need to identify the key opportunities
Insurers have started using wellness data for engagement and dynamic rewards and open health data takes us to the next stage. Insurers will need to assess how these new data sources augment their digital initiatives and how having a more accurate health benchmark would impact their new product development pipelines. Insurers can identify key opportunities by looking at their underserved customer segments and evaluating whether new data insights opens new opportunities. This includes populations previously considered substandard or declined. Insurtechs can play a key catalyst role to help insurers accelerate time to market and launch Pay How You Live insurance products faster with out-of-the-box solutions.
The biggest challenge will be protecting customer health data and earning customer trust that the data is used in a way that benefits them. The industry will constantly be challenged to maintain the highest standards of data privacy and protection. Lydia.ai believes that enabling customers to control their data and decide what to share is central to building trust.
“Tomorrow insurance leaders will be those who can effectively leverage all sources of data available to develop health benchmarks that most accurately represent the real world and understand a customer’s real needs. The more accurate, the more competitive insurers are able to develop new insurance products that capture underserved customer segments, improve offerings and adapt to the needs of existing customers. Using the health insights, leaders will also transform life and health insurance customer experience into one that is personalized and empowered to live with health and prosperity in mind.” Anthony Lee CEO & Co-Founder of Lydia.ai.
Interested in leveraging open health data in your insurance products? Click here for more information!