Last week, the Association of British Insurers (ABI) held their annual conference in London. As you might expect from such an important trade body, this was a major event, flawlessly hosted by Sian Williams of the BBC. The scale and influence of the insurance sector also proved enough of a draw to bring along Deputy Governor of the Bank of England Sam Woods and Scottish First Minister Nicola Sturgeon.
Unsurprisingly, both speakers (and a great many more besides) devoted significant time to the theme of Brexit, and whilst each came to the topic from a remarkably different starting point, it was clear that both felt a frustration with the current state of uncertainty. Collectively, the mood confirmed that the Financial Services sector finds itself in the dark regarding future risks, and unusually powerless to drive policy.
Towards the future: illness and wellness
Whilst political clouds hung heavily over the conference in general, a more optimistic note was sounded in the panel dedicated to in the future of life and health insurance in the light of healthcare trends. The session was chaired by Louise Hanson of ABI and included Dominic Grinstead of Metlife, Aisling Kennedy of Swiss Re and PHG Foundation’s Dr Phillippa Brice.
An early theme to emerge was the proposal that insurance companies focus increasingly on wellness rather than illness, to influence and enable positive lifestyle changes and to recognise the shift towards more personalised medicine, including opportunities for more personalised disease prevention and earlier disease diagnosis. Staying well for longer, as far as possible, is beneficial both for policy-holders and insurers and companies are clearly interested in what they can do to promote better health, including through employer-linked wellness schemes. The Vitality model of linking healthy behaviour with tangible benefits was praised as an industry standard – although caution was expressed that any influence on insurance premiums must be seen as a reward/reduction for ‘good behaviour’ rather than a penalty for non-compliance.
Staying well for longer, as far as possible, is beneficial both for policy-holders and insurers and companies are clearly interested in what they can do to promote better health, including through employer-linked wellness schemes.
The adoption of digital solutions to behavioural as well as medical problems came through again when Malcolm Dean of the Guardian queried whether companies could address the imbalance in willingness to make GP visits between men and women; men reportedly remain surpisingly reluctant to see a doctor, even with quite serious symptoms, which can be a significant barrier to early diagnosis. Philippa Brice proposed that the solution may lie with wearable technologies, able to monitor health conditions and prompt clinical appointments based upon measured health data; it was noticeable that many session attendees were wearing fitness trackers.
Is personalisation a problem for insurance?
The theme developed further when the concept of precision medicine was placed into an insurance context. Personalised healthcare, which may offer superior health outcomes by offering treatments tailored to patient sub-groups or even to individuals, may also seem at odds with the insurance industry’s current preferred model of a large pool of potential patients with a generalised risk. Domenic Grinstead expanded this issue to highlight the phenomenon of ‘adverse selection’, where an individual may possess significantly predictive personal health information that is unavailable to the insurer (as is currently possible through the voluntary genetic testing moratorium). Insurers were said to have experienced individuals taking out high-value life or health insurance policies immediately before revealing the existence of significant disease predispositions. Whilst it is quite possible that a well-informed customer may insure themselves according to their known risks – and the impact this may have on the normal shared risk models of insurance pricing – it was also pointed out that a health-conscious individual is more likely to look after their own wellbeing.
Preparing for change
In conclusion, the panel discussed the readiness of the incumbent insurance firms to embrace personalised medicine, including developments in genomics and digital health technologies. Innovation has been slow to come to insurance, it was felt (and not only in healthcare), with the suggestion that new partnerships with healthcare and insuretech start-ups and other companies will be needed. In the light of consumer expectations, “the insurance sector is stagnant… and needs to be re-energised” Grinstead stated.
Whilst it is clear therefore that the UK insurance sector is primarily focused on the broader political issues of the day – and fundamental threats to its international standing – life and health cover remains an important market sub-sector. It is also clear that whilst Brexit may be a more immediate threat, embracing advances in genomic medicine, digital devices and personalised healthcare will be vital if the UK insurance industry wishes to maintain leadership amongst its global peers and avoid costly effects of increasingly available and powerful health data.