There are times when even the fiercest rivals need to work together, be that in the face of industry-wide disruption, evolving regulatory requirements, or simply to meet changing customer needs and expectations.
Creating such cooperation is a looming challenge for health insurers, currently facing all of the above factors, and with the critical caveat of maintaining sovereignty of your most precious asset – data.
Every organisation has valuable data. In the health and insurance sectors this is felt acutely, as the nature of the data itself is inherently private. In our experience as a solution technology provider for secure data collaboration, we know you are cautious custodians of sensitive customer data, and for good reasons.
The innovation imperative
Sovereignty is critical, yet insurers also understand that there is the potential to unlock powerfully helpful insights. Multiple independent data sources can help reveal a more holistic customer picture, allowing organisations to offer the right service at the right time and provide a superior, and more personalised customer experience.
Like many sectors, insurers seek innovation, which is just as important for retention as it is for winning new customers. There’s pressure to preserve the value proposition of an intangible product. This has become more urgent in recent years with the development of significant price-based competition.
The health insurance market in Australia has been driven in part by taxation penalties designed to get younger consumers into health insurance. The industry’s response has been to create ‘just the basics’ policies designed to tick boxes on paperwork with bargain basement price tags.
Online comparison calculators further encourage customers to find the cheapest policies without much regard to value. Arguably, this focus on low-budget products has come at a cost to the industry as a whole.
The Australian Competition & Consumer Commission (ACCC) has reported growing levels of public frustration with the sector. Younger Australians in particular have indicated their dissatisfaction with health insurers, with the incremental but steady rises in premiums – on average, twice the rate of inflation.
Meanwhile there is public demand for better quality at this low-budget end. Increased scrutiny from government regulators add to the pressures. The federal government has indicated it wants more transparency over policies. From April next year, it will rank the 70,000 private health insurance policies held by 13 million Australians, although exactly how meaningful this will be remains to be seen.
Customer experience is key to differentiation and there are obvious areas of focus, including easier interactions, painless claiming, useful apps and tools. Personalisation also offers a viable route away from priced-based comparison, allowing insurers to demonstrate their value to customers and their relevance during healthier times of life.
Insurers already offer a variety of wellness and fitness extras as well as special programs for patients with chronic disease. At IXUP we are inspired by the potential for early intervention unlocked by data collaboration and believe health insurers are well-placed to deliver more powerful, preventative initiatives .
Providing the right services
Healthier customers mean a healthier bottom line. There are benefits, too, for the broader community considering the intense pressure Australia’s health system is currently under. With 1 out of 2 Australians suffering some form of chronic disease — 1 out of 4 having multiple chronic conditions — the demand is destined to increase with Australia’s greying population.
Frustratingly, the strain on our hospitals comes in part from a plethora of procedures that may not even be necessary or of benefit, but which insurers are legally obliged to pay for, such as endoscopy in under 55s, knee arthroscopy and spinal fusion (according to Sydney University research).
There is also the burden of procedures that could be performed outside the hospital setting, by clinics or other care providers, rather than aggravating the nation’s long hospital waiting lists. This is money that most would agree could be better spent.
Globally, the competitive landscape in health insurance is changing. Disruptors are envisaging a new world of healthcare. In the UK, global shopping giant Amazon is considering a feature comparison service. Research company Global Data found the consumers, in the UK at least, would seriously consider buying policies from one of the tech giants. In the US, Google’s parent company Alphabet is funding a health insurance start-up and Apple is intending to open health clinics filled with its own technology for its employees.
Whether these big names eventually enter the Australian market, the message is clear: disruption is likely and while Australia’s regulatory environment may not welcome newcomers at present, barriers can be removed at the stroke of a pen.
While they may not make the most obvious of bedfellows, there is an opportunity for Australian health insurers to work more closely together, whether driven by regulatory or public pressures for transparency and ranking, or as a means of finding innovation and shoring up customer relationships in the face of disruption.
It’s not unheard of for giants to collaborate. Global telcos cooperate to provide the best connectivity for their customers, and software companies often work together to contribute to technology standards. In healthcare, interoperability is a cause which has the likes of Amazon, Google, IBM, Microsoft, Oracle and Salesforce agreeing to work together.
Traditional rivalries will always remain, as they should for the sake of competition and fairness, yet providers of similar weight can also become ‘frenemies’ for the purposes of enriching data.
There are good reasons to work together, securely. Both organisations can benefit from connecting their respective data, unearthing insights that might otherwise be locked away. Secure data collaboration is a key step towards revealing a more complete customer picture and delivering personalised services.
Of course, the prospect of exposing data in any way is deeply challenging, particularly in this industry where customer data is very legislated and the need for its security is well understood.
That’s why we at IXUP believe secure data collaboration is the solution. It allows multiple organisations to connect multiple data sets, without losing control of the data, and without ever revealing that data. It allows all parties to see the bigger picture, deriving more value together than could be uncovered separately.
Importantly, conversations in the public arena using the words ‘data sharing’, should be met with scepticism as that particular concept is fraught with risk. No matter how hard policy makers work to provide legal and regulatory safeguards, the plain fact is that ‘sharing’ data is essentially a donation, after which good will, rules and promises cannot reduce risk of misuse, accident or negligence. It is also worth noting that depersonalised data is not necessarily safe, and not that effective as a preventative, and redacting personally identifiable information isn’t a cure-all for data security problems.
Secure data collaboration allows for progressive organisations to use their data to innovate and provide services that improve the customer experience. It allows them to respond to challenges as an industry, working together without jeopardising their most valuable assets.
We don’t imagine health insurers ever being the best of friends, but in this important sector, the opportunity to make ‘frenemies’ has far-reaching potential.
Find out today how enemies can become frenemies using IXUP’s secure data collaboration technology to enable innovation and compliance.
David Bonham is Chief Financial Officer and Chief Operating Officer of IXUP, an Australian software technology company.