Hurry up! Everything changed, permanently.

Or maybe not.

?Nothing happens overnight in the insurance sector, a period of five-ten years is needed to adequately evaluate a trend. Some international best practices have emerged in the usage of IoT in the health insurance business over the past few years. Further opportunities to exploit the value of IoT data will be addressed by the next wave of innovation. One of the most intriguing use cases is the "insurance digital twin".

The original version of this article has been featured on the April 2020 edition of the Risk Management & the Future of Insurance by Business Reporter

Futurologists and insurance professionals focused on innovation used to love to talk about disruption and hunting black swans. Nowadays they predict a “new normal” arising from Covid-19 that fits with their hopes. Each of them is designing a future based on their own self-image.

I've dedicated my activity in the insurance sector to innovation, but I've never found my view aligned with the crowd who follows the "disruption" buzzword or utopic scenarios Instead, I’ve always concentrated on innovations driven by business needs. My focal lens has been insurance fundamentals, therefore the study of the expected impacts of insurtech solutions on these fundamentals.

I've been lucky enough to advise more than 100 companies in 20 different international countries about insurance innovation over the last eight years. I've seen relevant changes happen in these insurance markets over this period. However, it’s clear that nothing happens overnight in this sector, so some futurologists’ predictions are basically wishful thinking. On the stages of 2019 international insurance conferences, I've enjoyed playing with their old predictions for 2020 about "numbers of telematics auto insurance policies", "weight of digital channels on insurance distribution", and "shrinkage of auto insurance business due to autonomous cars".  

A few months ago, I had the opportunity to receive an appraisal on some of my old advice about the innovation of the health insurance business. I had a workshop with one of the members of the IoT Insurance Observatory, the think tank I founded to support European and North American insurers in their journey to innovate on the different insurance business lines through the usage of IoT data. Within the team present at this meeting, there were two senior executives who, in 2012/2013, had leadership positions in organizations I advised on health insurance at that time.

While presenting different opportunities, during this meeting, to innovate their health insurance business, it was extremely interesting to debate success stories and failures that have happened in international health insurance markets I had the unique opportunity to review with the same people the advice I gave them seven years previously.

The vision that guides my thinking about IoT role in the health insurance innovation has matured, but the fundamentals are consistent with my old thoughts. However, the most interesting part was the deep discussion on each IoT-based use cases and the parallel with the old advice given seven years ago. 

My old advice was articulated in seven areas of opportunity, and all of them were ambitious innovations at that time. After all these years, one of those areas is no longer on my shortlist, but the other six are clear opportunities to create value in core health insurance processes.

So, what are these confirmed opportunities? Promotion of healthy behaviors (leveraging wearables and third-party data), and mobile-based remote consultation (through chat/video/call) with doctors are both approaches adopted by many health insurers in different international markets. The level of maturity of these use cases is pretty high, and there is clear evidence of which approaches are more effective. Other three confirmed areas of opportunity to adopt IoT are early detection, care optimization, and medication adherence. These three innovation opportunities along the patient journey show a low level of maturity, but on each of them there are some international pioneers that have integrated these aspects into their core processes as well as multiple active pilots carried out by others. Finally, the usage of IoT data for precise underwriting before the quotation seems to be the less mature of my old use cases. We have seen some best practices around continuous underwriting, but less on the usage of IoT-based scores for first quotations.   

What’s next for the usage of IoT in the health insurance sector? In that meeting, we discussed some other more innovative use cases, which have been rationalized by the Observatory but have not yet been explored by any insurers around the world. From my point of view, they will represent the next innovation frontier. One of these IoT-based use cases is the "insurance digital twin". In a nutshell, it is a digital replica of the real-life of the customer that will allow exploitation of the full potential of the available data on the different Insurer's functions, and potentially cross-business lines.