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Health insurance in Asia: time for a check-up?

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The insurance industry is amidst major transformation. 74% of insurers believe that the insurance industry is at the brink of disruption. Disruption in the health insurance industry stems from inefficient agent-led distribution mechanisms juxtaposed with poor customer service, homogenous products, and large profit margins. We spoke to Cole Sirucek, CEO at DocDoc about the health and insurance industry in Asia, and why their business model tackles some critical pain points in the industry. 

What areas within health insurance are ripe for disruption?

Driven by market inefficiencies, two types of models will emerge in the world of health insurance. As an insurer, if you are not going to offer great customer service, then an expensive pool of agents is unnecessary. This is the disruptive model of low-cost insurers who choose to reach the consumers directly via digital channels. These low-cost insurers bypass agents altogether and provide insurance at a much lower cost, therefore eating into the large profit margins of the incumbents.

However, if you choose to operate on an agent-led distribution model, then the agents should be a conduit for value to the consumer, which is currently not the case.

When entrepreneurs analyse the insurance industry and choose their path of disruption, they have two options: either follow the low-cost digital distribution model or offer data-centric services that empower agents to offer more value to their policyholders.

Today, groups like FWD, Singlife, and Now Health are some of the players who opt for the low-cost high-quality coverage model. On the other hand, groups like Prudential, AIA, AXA, Bupa and other incumbents choose to stay on the agent-led distribution model (for now) and are in the search for tools that can empower agents to provide a better customer experience and make their policies more valuable. In essence, they are differentiating their policies with value-added services and this is where companies like DocDoc play a vital role.

It is said that customer loyalty is at an all-time low and competition is at an all-time high – what can insurers do to stay relevant and profitable?

According to a survey by IBM, 57% of the policyholders don’t trust their insurers. This is not a surprise, considering insurers rarely interact with their policyholders and when they do, they end up actively offending their policyholders (the average net promoter score in the insurance industry tends to be about 4 on a scale of 10, where 7 is seen as a good experience and anything less than 6 is an active offence).

Added to that, stiff competition from new age digital insurers as well as tech giants entering the insurance space is biting into the large profit margins of incumbent insurers.The only sustainable path in today's market is through innovation. Large insurance corporations today are pouring resources to build collaborative partnerships  with FinTech and healthtech startups who can deliver value to their policyholders.

Over the medium term, a core competitive advantage of incumbent insurers is going to be their organisations' ability to be in high-quality partnerships with innovative and much smaller companies.

The incumbent players that learn how to be quality partners will attract the highest quality startups and as a consequence, will outperform their peers by delivering more value to their policyholders. The ones that do not will become irrelevant.

Make no mistake, the level of disruption that is afoot in the insurance industry in Asia is profound and will wholly disrupt incumbent players who do not adapt to a new reality.

In healthcare, the road to innovation starts with consumer empowerment. Consumers are tired of being sold healthcare. They are tired of being told that medical jargons are too complex for them to understand. By partnering with data-centric companies who understand the pain points of the policyholders and have a track record of successfully serving them, insurers can provide a differentiated product that truly stands out in the healthcare market.

Actuarial analysis has become largely a commodity. The future of insurance resides in data-centric services juxtaposed with excellent customer service. This represents a profound transition in culture, organisational structure and expertise for incumbent insurers.

Can you explain the DocDoc working model? How are you different from other medtech platforms?

DocDoc is Asia’s leading patient empowerment company. Operating in 8 countries with more than 23,000 doctors, DocDoc enables patients to find the right care at the right time. The service is available to insured patients through insurance firms motivated to assure their members receive the highest quality care.

We are fundamentally different from most healthtech platforms that help consumers find and make appointments with doctors. We are not a directory of doctors with a booking function - an online phonebook, if you will. These platforms typically only offer minimal information on a doctor’s expertise and background. We believe that doctor discovery must go much deeper. Consumers are increasingly demanding transparency in their healthcare decisions at a condition and procedure level of granularity, and that is precisely what we offer. We believe that healthcare can and should be safe, transparent, and fair.

A helpful analogy is a high-end dating service which matches two people based on their unique preferences. In dating, it isn’t a matter of finding the best person, it’s about finding the right person for your particular needs. At DocDoc, we use a similar approach when helping patients find the right doctors for their unique medical needs. We leverage medically relevant data to create intermediate markers that allow consumers to make informed healthcare decisions.

Our business model ensures that everybody wins. The patient finds a doctor that is highly qualified to treat their condition. The physician, who excels in specific treatments and procedures, has DocDoc validate their expertise and send select patients to them so they can focus on clinical care. The insurance firms, knowing that happy patients maintain memberships, partner with us to assure their patients make informed medical decisions.

What is your diagnosis for the healthcare industry in Asia?

With double-digit growth rates, Asia represents one of the fastest growing healthcare sectors in the world. And in the backdrop, we see an ageing population with a consistently rising sedentary lifestyle. Medical inflation is already a major problem which will only accelerate going forward.  For example, Japan’s healthcare expenditure hit an all-time high of $36b in 2017. According to a report by Aon, medical inflation level in Singapore is expected to be 10% in 2019, which is well above the global average of 8%.

With rising healthcare costs, there is a rapid increase in demand for insurance. Consumers are actively looking to their health insurers to provide them with tools that help them navigate the complex healthcare ecosystem.

Today, informed and demanding patients are partners in their healthcare. The future of healthcare in Asia will see more data-centric ecosystems where health insurers, healthcare providers, and tech companies come together to empower patients to make data-driven healthcare decisions.

What’s your opinion on doctor discovery?

When a loved one undergoes a serious illness and needs your help in finding the right doctor, what do you do? Do you simply search on google and trust advertisements? Do you ask your friends and family who can only give you recommendations based on personal anecdotes? Do you ask your insurance company who hand you a list of doctors? Do you simply trust brand equity and go to the largest hospital in town? This is the current situation of doctor discovery around the world and it is completely unacceptable.

Unfortunately, even in the United States - one of the world's most advanced healthcare markets -  medical errors is the 3rd leading cause of death. Finding the right doctor, at the right time often makes the difference between life and death.

Creating a transparent ecosystem between doctors, patients, and insurance providers is both optimal and inevitable. No two doctors are created equal. They have trained to specialise in a particular field. We need to recognise them for their unique expertise and match them to the relevant patients who require that specific treatment. Insurance companies and patients are both aligned in this regard.

Matching patients to the most suitable doctors based on verified information can lower complication rates and readmission rates. In the long run, this reduces costs for insurers as well as increases in customer satisfaction ratings will lead to sustained higher profits.

As an insurer, you do not have to make decisions for your policyholders, you only need to empower them with the relevant information so that your policyholders can make informed healthcare decisions.

What’s your expansion plans? Is India a potential market?

Currently, we have a network across 8 countries in Asia, including India. India is a market with unique challenges which offer plenty of opportunities for InsurTech companies. While our current focus is on Singapore, Hong Kong, Malaysia, Indonesia and Thailand, India is definitely a potential market where we will look to deepen our partnerships in the upcoming years.

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