The document discusses innovation in the health insurance industry through the introduction of health and wellbeing incentives. It analyzes trends driving innovation, the competitive environment insurers face, demand for incentives programs, and long-term considerations. Key takeaways note that the industry is undergoing unprecedented change, incentives programs have growing consumer demand but also pitfalls, and insurers will form ecosystems with other health organizations in the future.
2. Health and Wellbeing Incentives
Index
Health
Insurance
Innovation in Health
Insurance Industry
A.
B.
Health Insurance
Competitive
Environment
C.
Demand for Health
and Wellbeing
Incentives
D.
Long term
considerations
Key take
aways
December 2015, Milan
Innovation in Services Group Project
3. 23
Health
Insurance
Innovation is driven by external sources as well as internal development
Sources: Online Research, Journals and Technical input from classes
New Tariff Plan
> Corporate wellness
and incentive programs
in early stage in terms
of development and
diffusion
> Focus on learning
and improvement
> Current models
based on voluntary
participation
> Increasing costs put pressure on
insurance firms
> New regulatory aspects
> Business model shift from spreading
risk to reducing risk
> Increased data availability
> Leverage data and technology for the
introduction of new tariff plans for
customers
> Make use of data reliability in order to
calculate more individual premiums
> Establish incentives for customers to
engage in a healthier lifestyle in order to
decrease the risk
Trends in the Health
Insurance Industry
New Challenges in the
Health Insurance Industry
Scope of the PROJECT
4. A. Innovation in
Health Insurance
Industry
Health
Insurance
December 2015, Milan
Innovation in Services
Group Project
5. Health
Insurance
Main features of the new service
Impact of health incentive programs varies across the four main features
> Level of interactivity
increases
> Consumption no longer
one-time incident (e.g.
accident)
> Continuous data transfer
enabling the customer’s
benefits
> Outcomes are feeling of
security, Hedging against
uncertainty, and Access to
treatment
> No change in intangibility
of outcome but in
interaction with firms
> High standardization at
front office and back office
> New tariff plan lowers
level of standardization
> Higher perceived
customization
N/A
Ability to store is not
affected
INSEPARABILITY INTANGIBILITY HETEROGENEITY PERISHABILITY
A.1/3
Sources: Online Research, Journals and Technical input from classes
6. From > Standardization of contractual features
To > Customization offers
From > Fee-for-service
To > Fee-for-value
From > Short term transaction
To > Long-term relation with customers
Service Characteristics
Health
Insurance
Characteristics of the new service
A.2/3
New service proves novel due to changes service, client interface & backoffice technology
Process Characteristics
From > Workforce with traditional skills
To > New competencies in human capital
Technical Characteristics
From > Non use of big data
To > Exploitation of big data
From > Deficient IT systems
To > Developed IT capabilities & platforms
Sources: Online Research, Journals and Technical input from classes
7. Health
Insurance
Type of Innovation
A.3/3
Sources: Online Research, Journals and Technical input from classes
D
TYPE
Process Innovation
Barras reversed life cycle
reversed?
Process &
Organizational
Innovations
A3
TYPE
Product / Service
Innovation
Offering of a new service, a
new concept or new policy to
the whole market
Product/Service
Innovation
“Absolute” Innovation
Create
new
Markets
Improved customer satisfaction in short term, in long term creation of new markets
9. 9
2008 Castellacci
Health
Insurance
Technological trajectory
The insurance industry is highly dependent on external sources of innovation
B.1/4
Sources: Online Research, Journals and Technical input from classes
> ICT based
technological
paradigm
> Driving a
Schumpeterian
discontinuity
> Supporting
infrastructural
service – network
infrastructure
> Dependence
will foster
development
> Insurance
industry a
recipient -
highly dependent
on external SOI
10. Software Developers
Wearable developers
Governments
Big data
Health
Insurance
Sources of innovation
B.2/4
Dependence on advanced knowledge providers is leading to partnerships
Sources: Online Research, Journals and Technical input from classes
Medical Industry
of insurance
companies believe
industry boundaries
will dramatically blur
as platforms will
reshape the industry
to an ecosystem
75
%
Partnerships of insurers say
managing data is
“extremely” or
“very” challenging,
considering
changes in its
volume, variety
and velocity
56
%
11. > 22% of Insurers are
developing a strategy to use
wearable devices
> 3% of insurers use
wearables devices
Strategy Meets Action - SMA (2014)
12. Health
Insurance
Competitive landscape
It is possible to divide the market into three main competition clusters
> Exploiting wearables
in order to control
consumers data
Incentive programs
to award healthy
behavior
B.3/4
1. 2. 3.> Applying Health ad
Wellness programs
manually
Manual Digital Data networks
> Potential new entries
> Mainly present in US
and UK
Sources: Online Research, Journals and Technical input from classes
13. Health
Insurance
Means of appropriation
Big data algorithms protection should be a priority
B.4/4
Sources: Online Research, Journals and Technical input from classes
> BIG data algorithms are key for success
> Easy to imitate the Business Model
> Difficult to patent software
> Lock-in costumers and create an “interconnectedness” network
15. Meet the
Me Society
> Easily accesses information
> Bears option overloads
> Value bespoke offers -
products/services customized
according to its needs and tastes
> Unbending when it comes to pay
for non-valued “extra” features
16. 16
Customization
Health
Insurance
A Culture of Customization
“Me Society” is driving innovation in a variety of industries, Health insurance included
C.1/5
Sources: Online Research, Journals and Technical input from classes
Disintermediation Democratization
New value proposition
focused on getting closer to
customers, better understand
their behaviors/risks and use
their data and technology to
develop efficient health and
wellbeing incentives
Health Insurance
#1 #2 #3
17. Graph Source: segmentation proposed by Forrester Research - an independent technology and market research company – presents a possible
segmentation of the US health insurance market, their relative size and attractivity based on a survey of more than 4,500 US online consumers.
Health
Insurance
Health & Wellness Incentives targeted segments
Innovative Health & Wellness incentives primarily targeted to tech savy customers and corporations
Fitness
Trackers
Invested and
Informed
Healthy and
Subsidized
Corporate and
Content
Apathetics
Frugal
Patients
14% 19% 21% 19% 11% 15%
% of Population
High Value Target
> B2C - with higher focus
on the “Fitness Trackers”
than on the “Invested and
Informed” segment
> B2B - partnering with
corporations and taking
part on their Worksite
Wellness Programs
Targets addressed
C.2/5
Sources: Online Research, Journals and Technical input from classes
19. Health
Insurance
Rate of diffusion - (i) B2C Segment
Timid, still increasing, market potential
C.3/5
Sources: Online Research, Journals and Technical input from classes
Supply Side
20. Health
Insurance
Rate of diffusion - (i) B2C Segment
Timid, still increasing, market potential
C.3/5
Sources: Online Research, Journals and Technical input from classes
Demand Side
22. Health
Insurance
Rate of diffusion - (ii) B2B Segment
Strong Market Potential
C.3/5
Sources: Online Research, Journals and Technical input from classes
23. “Self-insured oil giant BP has taken the monitoring a
step further. Last year around 14,000 employees
opted to wear a free Fitbit Zip in exchange for letting
the company track their steps over the year 2013. If
they crossed one million steps, they gained points
that could go towards a lower insurance premium.”
Forbes magazine - Wearable Tech Is Plugging Into Health Insurance -
JUN 19, 2014
24. Health
Insurance
Pitfalls
Dependence, accuracy and participation rates are the most visible drawbacks
C.4/5
Sources: Online Research, Journals and Technical input from classes
(i) Insufficient level of technology
development, insurers still
rely on its clients’ trustworthiness
(ii) Extreme
dependence and
dubious accuracy of
wearables
(iii) Difficulty in accessing the return
on investing on health & wellness
programs within its employee force
(iv) New tariff plans
may be perceived as
discriminatory
regarding people’s
genetic health status
or disability
(v) Participation rates in health and wellness
programs are still considered low in the older, less
active and tech excluded part of the population
25. Health
Insurance
Privacy issues
Even though the number of tech savvy users is increasing, privacy remains a major concern
C.5/5
Sources: Online Research, Journals and Technical input from classes
82
%
86
%
of consumers buying
tech devices say they
are concerned with the
potential invasion of
privacy
of consumers buying
wearables are
concerned with potential
security breaches
27. Health
Insurance
Long Term Considerations
Stakeholders from across health care will form ecosystems
D.1/1
Sources: Online Research, Journals and Technical input from classes
“(…)the next-generation insurance
company will benefit from human and
technology collaboration, with workers
leveraging new technologies such as
wearables to augment their abilities and
help them make better decisions.”
Accenture, 2015
ECOSYSTEM
Hospitals
Healthcare
Information
Exchanges
(HIE)
Laboratories
Employers
Software &
Application
developers
Doctors
&Physicians
Pharmacies and
PBMs
Governments &
Policy makers
Health
Insurers
Wearables/ tech
manufacturers
OPEN
INNO
VATION
28. > 75% of insurance companies
believe the industry boundary's
will blur
> 75% feel confident that the next
generation of platforms is led by
insurance companies.
Accenture 2015
30. Health
Insurance
Key Take Aways
Health Insurance Industry is facing unprecedented revolution
INNOVATION
ANALYSIS
COMPETITIVE
ENVIRONMENT
CONSUMERS
ENGAGEMENT
A. B. C.
1. 2. 3.> Innovation in Health
Insurance can be
considered novel and
successful as it creates
new markets in the long
run
> The insurance industry
is establishing
partnerships preparing for
the new era of insurance.
Yet, no dominant design
or disruption has occurred
> “Me Society” is ready to
adopt the new Health and
Wellness tariff plans.
Nevertheless, they are still
worried about the external
use of its data
D.1/1
LONG TERM
CONSIDERATIONS
D.
4.> In the long run
insurance companies will
initiate open innovation
relationships and bundle
with other health related
services in ecosystems.
31. 31
Christian Peschardt-Hansen
3020742
Maria Neves
3020172
Steffen Hepp
3020173
M.Sc. Strategy &
Entrepreneurship
B.Sc. Engineering
OUR TEAM
Attention
Thanks
foryour
Innovation
in Services
Università Commerciale
'Luigi Bocconi‘
Professor Nicoletta
Corrocher
M.Sc. Economics &
Entrepreneurship
B.Sc. Business
Administration
M.Sc. Mngt of
Innovation & Business
Development
B.Sc. International
Business
