It's time for a smart health insurance plan

The 21st century is an era of smartphones, smartwatches, smart cars, and devices that have embraced technology. How about a SMART health insurance plan? A plan that rewards you for living a healthier and fitter lifestyle than before? A plan that is tailored according to your needs? A plan that monitors your daily progress and helps you cope with any shortcomings? A plan that includes a wearable or M-Health application tracking the number of steps per day? Yes. Health Insurance is becoming "smarter" with the introduction of wellness programs or benefits.

What is the concept of wellness benefit/program?
A program intended to improve and promote health and fitness that's usually offered through the employer or as a part of the individual's health insurance policy. Wellness programs have been running as a part of employee benefit programs incorporates, and have recently gained popularity in the individual health insurance space because they focus on preventive healthcare more than curative care. Insurance alone aims to form a risk pool that protects against catastrophic events like diseases or hospitalization etc. However, wellness is focused on reducing the risk of occurrence of the catastrophic event itself. Which in turn is a "double whammy" for the insurers – fitter customers, lesser claims. IRDAI the insurance regulator in India stated in the exposure draft of 2019 that insurers can provide wellness benefits to existing as well as new policyholders. It is mandatory to disclose all information about the product, any additional charges to avail benefits, a method to earn and redeem points as a part of the wellness plan, no discrimination policy, etc.

While wearable device data tracking is common in the western world, the number of smartphone users in India have also boomed. This gives the Indian insurers enough elbow room to incorporate M-health applications as a part of their wellness programs. Several plans in the market monitor the physical activity of their policyholders via M-Health applications as seen in the Health Jinn app of HDFC Ergo.

The #DoTheDifficult plan of ICICI Lombard allows customers to earn points by participating in marathons, walk-a-thons, and even buying gym memberships or taking a Health risk assessment. One point earned through the program is equivalent to 0.25 INR and the points can be redeemed to carry out OPD consultations or nutrition consultations.

ManipalCigna runs the Keep Active program, under which a wellness coach is assigned to each policyholder, health risk assessment is done and a plan tailored to the needs of the policyholder is created. The wellness coach monitors the progress of the policyholder and he/she is eligible for a discount on the premium.

The AB Multiply plan of Aditya Birla provides cashback of up to INR 5000 on purchasing a smartwatch. It also has several reward partners like the big basket, amazon, uber, beauty services, etc.
 
Leveraging Big Data to build a robust Business Model
According to a survey done by Milliman (2020)- the world's largest providers of actuarial services, respondents used devices to track health parameters like the flight of stairs, sleep cycle, distance covered, active time, heart rate. The survey also said that the most common device used to track the parameters was a mobile phone followed by Fitbit (wearable device).

This opens up an entirely new opportunity for health insurers to collect "real-time data" from their customers. This data can be used in different capacities like:
•    Enhancing predictive powers of the organization
•    New rating factors available to adjust the pricing of products
•    New Underwriting criteria available can help classify a policyholder into high or low risk

Creating a Partner Network
The ideal method to take this forward would be to partner with Tech start-ups, creating a holistic network that is easy to adopt by policyholders. Insurers can use the platform created by these tech-based firms and add more benefits to their current offerings. MI bands are popular among the Indian youth and collect health data, online pharmacies have tapped into a large market of chronically ill patients, digital platforms - mental health and many such examples can create a strong network for the insurers.

Probable Pitfalls of "Smart" Health Insurance Plan
Adherence or compliance by individuals can be an issue since not all will be comfortable to adopt the technology. Also knowing about the famous Indian "Jugaad" policyholders may undertake fraudulent ways to demonstrate fitness activity to avail reward points.

-    Authored article contributed by Dr. Anjali Chandra Kumar – Associate Professor. PGDM Healthcare Management, WeSchool & Dr. Jheel Madia Student PGDM Healthcare (2018-20)