Insurtech innovations targeting mental health present a lucrative gateway to establishing a strong share of 2020’s estimated $1.6 trillion global health insurance market.
Insurtech: the Future of Insurance
What is Insurtech?
Insurtech describes technology innovations that are driving the insurance industry towards more modern, cost-effective, time-effective, and efficient models and practices.
Essentially, insurtech uses technological advances in areas like artificial intelligence, big data, machine learning, and the Internet of Things (IoT), to address the current challenges and gaps in the industry. Fundamentally, insurtech is all about improving top-line sales, bottom-line profitability, and the customer experience.
There is a whole host of continually and rapidly developing insurtech applications that are disrupting otherwise limited traditional insurance models and practices, like policy creation, underwriting, and claims management.
The Time is Now for Insurtech Marketplace Establishment
In line with industry projections, as put by Rick Huckstep, the Chairman of The Digital Insurer and a keynote speaker and thought leader on insurtech:
“The lines between the old and new will blur into one as insurtech becomes mainstream by 2020…This will lead to the creation of whole new digital brands, designed to cannibalize traditional business.”
Insurtech is on the rise:
The bottom line? The rate at which insurance companies and incumbents successfully employ insurtech and adapt to inevitable market changes and demands will determine the size of their share in the next generation of the insurance industry, irrespective of the sector.
The Mental Health Key to Insurtech Success
Mental Health: a High-Value Target for Smart Insurance
Insurance companies are developing and investing in insurtech, either in-house or by acquiring, investing in, or hiring technology startups as service specialists. A high-priced example is the recent $60 million Allianz investment in American Well, a telemedicine platform for remote monitoring of physical health conditions.
In Deloitte’s insurance outlook report for 2018, “Shifting Strategies to Compete
in a Cutting-Edge Future”, insurers are encouraged to make use of insurtech across
their organizations—as part of an offensive strategy to expand their market share and a defensive measure to fend off potential competition from nontraditional insurtech companies.
As opposed to end-to-end solutions, another choice strategy for insurtech market penetration is to initially target particular value pools in the sector.
By focusing on a specific problem or untapped value within a sector that is crying for insurance innovation, like mental health insurance, there is the added bonus of more easily circumventing the jurisdictional legal baggage that comes with conforming to the full regulatory framework—a longstanding challenge for insurance industry innovation in general.
Mental Health Insurance is Ripe for Insurtech Innovation
The mental health industry is currently experiencing a similar technological revolution in the provision of an unparalleled level of personalized therapy and support, delivered in real-time using the IoT.
Known as augmented mental health, the future of the mental health industry simultaneously overcomes many problems that limit mental health insurability—a causal factor in the current mental health crisis.
The primary problem is the historically subjective nature of assessing mental health.
There is no blood or DNA test that objectively guarantees an individual has a particular mental health problem or diagnosis, only the therapist’s perspective, the client’s perspective, and secondary evidence related to impaired performance in daily living or at work can be used.
With the development of advanced algorithms to objectively monitor emotions and mental states from wearable biosensors and smartphone usage data (that sparked the augmented mental health era), the restraints that subjectivity places on the evolution of both mental health insurance and mental health care are lifted.
The Insurance Benefits of Augmented Mental Health
There are perhaps no better value pools set to have bigger payoffs than those in the mental health sector
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Slaughter, M., & Onu, T. (2018). Internationalizing InsurTech - A Global Phenomenon in Different Markets. The Insurtech Book, 88-90. doi: 10.1002/9781119444565.ch20
The Boston Consulting Group. (2014). Insurance @ Digital–20x by 2020.
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