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Four New Consumer-centric Business Models in Insurance

The insurance industry is changing and experts predict — nearly one-third of existing insurance models will disappear within this decade. The fierce competition, new opportunities with technologies like AI, and on top of that millennials’ changing preferences sum up to the call for more flexible and consumer-facing business models. Here are four new business models to set the insurance archetype.

Source: The Deloitte Global Millennial Survey 2019 

Social Good & Transparency as a Business Model

Currently, AI is being used to strengthen the capabilities and knowledge of insurers and not consumers, creating information asymmetry. But, the question is — for how long will the consumers accept being a victim of ignorance. 

A possible solution to this situation is bringing information transparency. It’s not like traditional insurers don’t share policy information with their customers. They do. However, lengthy policy documents and customers’ reliance on agents for information shadows the actual coverage, terms, etc. In a way, the information that customers receive becomes dependent on the agents’ knowledge and intentions.

Translating policy, terms and conditions documents into consumable bits of information with a clear distinction between what’s covered and what’s not will help in achieving transparency between insurers and customers.

For instance, Lemonade — the American Insurtech for renters and home insurance, disrupted the industry lately with their instant and transparent end-to-end insurance process. Their consumers are better aware of coverage and claims thanks to simplicity in the user experience. 

Moreover, Lemonade donates the unclaimed premiums to social causes their consumers care about. From its inception in 2015 to date, Lemonade has sold over 1.2 million policies, in complete transparency and all through their AI bot — Maya!

Nearly 46% of millennials are willing to make a positive impact on the society/community. Lemonade has partnered with 92 charities and has donated $8,46,849 from unclaimed premiums. Hence, the answer.

Similarly, Swedish InsurTech Hedvig has successfully deployed it’s “nice insurance” services, giving back 80% of the unclaimed premiums to charities chosen by the customers.

More insights on — millennials and their expectations from insurance ‘beyond’ convenience.

webinar: AI for data-driven Insurers

Join our Webinar — AI for Data-driven Insurers: Challenges, Opportunities & the Way Forward hosted by our CEO, Parag Sharma as he addresses Insurance business leaders and decision-makers on April 14, 2020.

B2B2C or API-based Model

When user acquisition is the top priority, B2B2C or API-based model comes into action. Also known as an open-source platform solution, this business model connects people and processes with technology infrastructure and assets to manage user interactions. 

In the API-based model, apart from traditional distribution channels, 3rd party apps also become a medium for customers to buy/access insurance policies. Automation plays a key role in this insurance model. Here, any other customer-centric digital application can install the API without manual/human intervention.

API-based Insurance Model Affinity Distribution Channel

For example, in January 2018, Allianz announced that it will offer parts of its Allianz Business System (ABS) to other insurance companies for free. Interested organizations can simply install the API (Application Programming Interface, which is nothing but a chunk of software that connects two different apps) and start selling Allianz policies to their customers.

Lemonade — after disrupting the insurance space through transparency, has now stepped into this model. In October 2017, the company launched its public API, allowing anyone to distribute Lemonade’s policies through their websites or apps.

“It takes years to pull together the licenses, capital, and technology needed to offer insurance instantly through an app, which is why it’s almost nonexistent. Today’s API launch changes that. Anyone with a slight familiarity with coding can now include these capabilities in their app, in a matter of hours.”

Shai Wininger, Co-founder, President & COO, Lemonade

P2P Insurance

Unclaimed premiums also contribute to conflicts between insurers and policyholders. What if a customer is not interested in donating to charity, unlike mentioned in the above case? 

Peer-to-Peer (P2P) insurance is perhaps an answer to eliminate premium settlement conflicts. It is also an emerging business model to access insurance coverage at lower costs than most of the traditional insurances. 

This insurance model pools the individuals who share at least one relation — friends, family, or interest (community/clubs) and it serves two-fold benefits-

  1. Every member knows other members, funds available, and claims initiated/processed. Therefore, irrespective of the information shared by the insurer, there’s a transparent collaboration among peers.
  2. Since the members know each other socially, there’s a negligible chance of fraudulent claims. For instance, in the US alone, insurance frauds amount to nearly $80 billion/year.

Also read – how behavioral psychology is fixing modern insurance claims

The notion of financial protection for the community has been prevalent in our societies since the 1600s. In the middle ages, the tradesmen followed the guild system (an association of craftsmen and merchants), where participants paid fees as a kind of insurance safety net. Though, the successful conceptualization of P2P insurance in the modern business models dates back to 2010 with German InsurTech — Friensurance. However, the P2P insurance model has credited the success to many more InsurTechs like Guevara, Axieme, TongJuBao (P2Pprotect), and PeerCover

Microinsurance

The greatest limiting factor for the success of microinsurance is distribution. For example, in the US, 18% of the premium represents the distribution cost, set aside marketing and advertising costs. Availability isn’t the issue for microinsurance. 

The new business model for microinsurance focuses on outreaching and distributing policies at scale. Workflow automation solutions like document processing, automated customer query resolution, etc. make microinsurance models more effective. 

  1. Aggregator model: Instead of traditional agents, retailers, utility or mobile network operators, etc. can be intermediaries for the distribution of microinsurance policies. They provide access to a very large consumer base and even more with free and freemium coverages. For example, Check24, a European aggregator together with HDI insurance developed AurumPROTECT that is available exclusively through aggregators channels. 
  2. Harnessing proxy insurance sales force: Banks have been the ideal partners to distribute microinsurance policies at scale for ages. But, for short-term policies, this is a good time to utilize the agents of other products to offer insurance as an ancillary product. For example, Ola — an Indian cab aggregator provides a number of travel-related microinsurance underwritten by Acko General Insurance. 

The Bottom Line

The effectiveness of each of these models drills down to the smart use of technology in their implementations. Moreover, most of these business models are automated, thus, eliminating additional human resources for implementations. For instance, in India, an agent can charge up to 20% of the premium amount as fees, which can reduce significantly if the distribution is automated. Investment in technology for automating operations is also worth it because it makes customer outreach simpler and faster. 

Also, read – 5 Front-office operations in Insurance you can automate with AI.

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MantraTalks Podcast with Parag Sharma: Delivering Digital-first Health Experiences for Patient Care in the New Normal

6 minutes read

The healthcare industry took the brunt of the Covid-19 pandemic from the very beginning. It was, and still is, a humongous task for hospitals to deal with the rising number of COVID patients as well as handling the regular consults. 

To delve deeper into the state of healthcare in the COVID times, we interviewed Parag Sharma, CEO, Mantra Labs Pvt Ltd. Parag shares his insights on how technology can help in delivering digital-first health experiences for patient care in the New Normal.

Parag is a product enthusiast and tinkerer at heart and has been at the forefront of developing innovative products especially in the field of AI. He also holds over ten years of experience working in the services line and has been instrumental in launching several startups in the Internet & Mobile space. His rich domain expertise and innovative leadership have helped Mantra climb to the top 100 innovative InsurTechs in the World – selected by FinTech Global. 

Catch the interview:  

Connect with Parag- LinkedIn

COVID-19 and Its impact on Healthcare Organizations

Considering the COVID situation, according to you how has COVID-19 impacted the IT & service operations among healthcare organizations?

Parag:  Since the onset of COVID-19, the healthcare sector has been deeply impacted. Institutions are facing a serious crunch in manpower. IT support systems which were usually manned and managed by a large team of IT professionals are not available in the same strength. Resource allocation’ is one of the biggest concerns due to physical and mental exhaustion of the healthcare workforce. 

Hospitals are facing issues such as operational disruption due to staff quarantine, supply-chain delays and sudden decline in patient footfalls, difficulty in sustaining fixed costs, etc. People are not comfortable getting out of the safety confinements of their homes due to the rising risk of getting infected with the virus. Hospitals will have to reassess their future strategy and budgets in light of the uncertain economic situation.

Preparing for the Future

What can hospitals do to ensure the continuity of their customer-facing operations in the wake of a second Pandemic wave?

Parag: There are many things that hospitals can do to manage themselves in this hour of crisis. Being more digital than what they are would be one step forward for all of them. They can bring their IT systems to the cloud so that the person can access data and manage their work remotely. They can enable their patients to book appointments and enquire about services through apps and chatbots which won’t require them to call the reception or come to the hospital. These are some of the services which hospitals can provide to their customers with minimum physical contact. 

Related: Manipal Hospital’s move to a self-service healthcare mobile application

Hospitals can extend Telehealth services to their patients. Recently, telehealth has proved to be useful especially when there is asymmetry between the number of patients and healthcare providers. I think it will be very useful for healthcare institutions to deploy telehealth solutions to provide medical facilities to people who have so far been outside the benefits of healthcare.

New Expectations in Health Experiences

Is consumer behavior defined by the ‘new normal’ going to change the way we access healthcare from this point on?

Parag: Yes, people will expect a completely different way to access healthcare services from now on. Hospitals should gear-up and rise to this occasion. The pandemic has also provided a new opportunity to adopt a completely different approach in the way healthcare is delivered. They always felt that medical care cannot be provided remotely but now this is happening and people are appreciating remote healthcare services. Hospitals and healthcare institutions are convinced that telehealth and remote care will be more successful soon.

Technology in Healthcare can Bridge Operational Gaps

What are the operational challenges, as far as digital capabilities go, that hospitals are facing currently? And, what steps must they take to bridge these gaps?

Parag: Operational challenges are not just digital challenges. But a lot of these challenges can be addressed with technology. For example, Electronic Health Records which hospitals manage within the premises can be moved to the cloud so that the person can access these records on the cloud itself and need not come to the hospital. 

Related: Medical Image Management: DICOM Images Sharing Process

Secondly, if you deploy telehealth and telemedicine solutions, irrespective of where your patients are or doctors are, hospitals can deliver the required care to its patients. You can even extend your diagnostics services to your patients by giving them an application through which they can seamlessly book appointments for consults, diagnostics, or pathological services and resolve their queries, etc. Simply by giving a seamless interface either through bots or applications can go a long way in providing better health experiences to the customers.

Role of Chatbots in Superior Customer Experiences

According to you, what role does chatbots powered by Artificial Intelligence have in the Healthcare CX landscape?

Parag: Chatbots are the simplest example of the implementation of AI-based technology in healthcare. There are a lot of things which bots can do simplistically. For example, if a patient wants to book an appointment with the doctors, instead of going through a complex web applications and interfaces, what if I can simply write “I want to book an appointment with the doctor Dr. XYZ at 4 pm” and the bot can figure out in case the time slot is available with that particular doctor, it will confirm the appointment followed by a payment process if the payment has to be made upfront. 

Apart from this, you can extend your bots to provide e-consultations where doctors can do remote consultations via audio and video features of a chatbot. So there is a huge scope for bots beyond answering routine queries by customers or booking appointments. It does not stop just there. You can extend chatbot functionalities to support functions such as admin, HR, finance, and business process efficiency so that they can provide better services to their customers.

Related: Healthcare Chatbots: Innovative, Efficient, and Low-cost Care

Chatbot Use Cases in Healthcare

Could you tell us some possible bot use cases for delivering better customer experiences to digital health users?

Parag: Apart from booking appointments and resolving customer queries, these bots can conduct remote consultations, internal processes, health symptom checker, out-patient video consultation, second opinion consultation, ordering medicines, psychological counseling & mental wellness, scenario-based risk advice, Heroism Recognition for employees, etc. Also, it can be further extended to help patients enquire about health insurance related queries, and all the interactions between insurance companies and hospitals can be provided to the patient. 

Related: Healthcare & Hospitals Use Cases | Digital Health

The Road Ahead

COVID-19 has forced hospitals to revise patient support strategy with limited operational staff that is bringing every day a new challenge. A way out is to heavily rely on digital innovation.

In India we have a disparity between the no. of healthcare providers and care seekers. Without technology, I don’t think there is any way healthcare institutions will be able to scale to a level where they can provide meaningful services to such a large number of people. Hospitals can invest in setting up an information exchange; making the process as seamless as possible; and removing all possible inefficiencies from the supply chain through technology.

Future growth for hospitals will come from digital technology because patients will opt more for digital platforms. And it is up to hospitals to catch up with the pace at which modern technology is developing. We, at Mantra Labs, have achieved several use cases including hospitals/diagnostic centers that are able to deliver superior health experiences.

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