Today, the Artificial Intelligence (AI) chatbot is being leveraged by more than 100 million people across countless sectors.
Similarly, the traditional industry of healthcare and insurance have not been exempt from this technological renaissance. A transformative wave of insurtech, the fusion of insurance and technology, has emerged as a game-changer by simultaneously enhancing patient outcomes, delivering a substantial return on investment (ROI) for insurers, and facilitating an all-around more efficient process for patients, hospitals, clinics, and insurance providers.
Despite healthcare’s critical role in the upkeep of human well-being, it has long been plagued by inefficiencies, rising costs, and access disparities. The COVID-19 pandemic has shown how vulnerabilities in health systems can have profound implications on patient care, healthcare workers, and as a result, health insurance efficiency and accuracy. These challenges have accelerated the development of insurtech solutions that leverage data analytics, AI, and digital platforms to reshape the overall healthcare ecosystem.
With the world we once knew being replaced by a “new normal,” and at a rapid rate, it is imperative to evolve with the times. The health and insurance landscape is doing just that through insurtech, and here are some key ways in which this benefits both patients and insurers:
Lower Costs, Higher Returns
In 2018, it was reported that approximately 1,500 insurtech start-ups existed worldwide. Fast-forward five years later, most recent estimates have seen this number surge to nearly 3,500 companies. So, what has contributed to this growth? Well, one factor is earning potential. Data shows that the total insurtech industry was valued at $5.4 billion in 2022; the revenue forecast for 2030 is an eye-popping $152 billion.
With insurtech, the need for a physical office or personnel to perform tasks can be minimised through chatbots or automation. This enables minimal overhead costs without having to compromise on operational efficiency, and as a result, insurtech companies can often offer great quality at competitive prices while still yielding a strong ROI.
However, beyond dollar signs, insurtech outperforms traditional insurance - by mitigating fraud.
More Data, Less Fraud
Let’s look at the United States, where 10-20% of insurance claims are reportedly fraudulent. Policyholders are said to commit fraud each year by relying on their insurance applications to get a better rate and according to the National Health Care Anti-Fraud Association, health insurance fraud is accordingly estimated at an annual cost of more than $100 billion.
Similarly, in the UAE, medical insurance fraud is a significant problem that is estimated to cost insurers millions of dollars each year. Authorities estimate that approximately 5% of claims paid fall into this category, pushing up the cost of insurance premiums by between 20% and 30% - this is where insurtech steps in, helping to detect fraud at a higher rate.
An example of this is the Sherlock Suite, a software that analyses large data sets and illustrates patterns and anomalies by using Artifical Intelligence as well deep coded clinical and medial knowledge. Sherlock uses trained models that flags fraud and abuse in future data, controlling fraud waste and abuse with up to 99% accuracy to provide immediate and long-term benefits.
Quicker Claims, Happier Clients
Speaking of long-term, the secret for any business to become and remain profitable is to provide clients with a seamless experience so that you can ultimately retain them.
With claim settlement being one the most common consumer pain points, any insurer worth their salt should seek out insurtech solutions as automation can cut claims processing time by 50% and help you avoid seeing your clients leave for other providers.
Competition in the health insurance industry is growing by the day, so enhancing the customer experience by processing and settling claims will help you keep happy customers.
Old is not Gold
Automation, machine learning, and deep learning models are seeing increased usage across industries including in the health and insurance landscape, and it is evident that a new era is being ushered in by insurtech. In fact, underwriting as a business will, for the most part, cease to exist by the decade’s end; a welcome sign considering that this manual process contributes to the errors that exist in 80% of all medical bills and the approximately 100,000 people that die yearly.
Traditional insurance, which involves tedious form filling and long wait times to not only secure medical appointments but also settle claims, is becoming a thing of the past. Future success in the healthcare and insurance sectors hinges on convenience and speed with nearly 50% of patients seeking out a more seamless experience and more than 70% of physicians looking to optimise workflow efficiency.
Insurtech allows patients and insurers alike to harness the power of technology for an unparalleled experience. It is a driving force behind why the Middle East and Africa’s (MEA) insurtech market is growing at a compound annual growth rate (CAGR) of 6% through 2028. This growth projection reinforces the notion that embracing this technological wave is not just an option but a necessity. The question we should be asking is not 'Why insurtech?' but rather, 'Why not insurtech?'
It's time for organisations to seize the opportunities it presents and usher in a new era of quality, timely, and ethical patient care.
Sandeep Khurana is the Founder and CEO of Perceptiviti, an artificial intelligence-based software provider for the insurance industry.