Lessons from auto insurance for health insurance
Consumer expectations have decidedly pivoted towards an e-commerce experience that guarantees value. Yet, in spite of the high level of complexity, health insurance have largely remained the exception — until now. Below are three lessons health insurance incumbents can learn from the auto insurance industry to better meet customer expectations, boost sales, and ensure long-term competitiveness.
One price doesn’t fit all
Auto insurers like Progressive, Allstate, and State Farm are using the Internet of Things (IoT) to monitor behavior — driver habits, changes in speed, how often they drive, and the time of day they drive are just a few examples. The hope is that doing so reduces costs by more accurately pricing driver risk. For consumers, this is a strong incentive to drive well and maintain lower premium rates.
This behavior-based model is a great example for health insurance companies in their product and pricing models for health plans. Walking 10,000 steps a day, getting an annual checkup, and other health-related behaviors can be a good indication that overall health can be incorporated into innovative behavior-based health insurance products.
This is particularly appealing to millennials, for whom wellness is a daily activity. Recent Goldman Sachs research indicates that millennials are exercising more, eating better, and smoking less than previous generations. This generation is using apps to track training and nutrition data, which can be incorporated into risk assessments to help insurers stay competitive. This data also presents insurers with more opportunities to incentivize healthy behaviors by rewarding members who reach certain milestones.
Insurance shopping has to be an online experience
Insurance is complicated, and there are many factors that go into understanding the value of coverage. For consumers, choosing the best plan for your needs is much simpler when marketplace comparisons can be made. In the auto insurance world, such comparisons exist. For example, NerdWallet allows users to compare quotes from multiple car insurance companies at once. Comparing exactly what is being offered — and at what price — simplifies the process of choosing a provider and plan.
Similarly, consumers would greatly benefit from health insurance marketplaces where they can get educated, view quotes, and enroll in plans within minutes. Easier-to-understand product information, reviews, and price comparisons should guide the transition to a marketplace model for the health insurance industry. Considering that we may soon see more short-term plans and association health plans (which are not as comprehensive) alongside standard plans, it is especially important for consumers to understand exactly what they are purchasing and what services will be covered. An e-commerce platform would help ensure that consumers are actually comparing similar plans that will provide them with what they need.
Empowered agents can make personalized recommendations
Auto insurance companies such as Goji and CoverHound operate data-driven platforms that help agents match customer needs with the correct coverage through integrated networks of insurance carriers. In the health insurance industry, there is a similar opportunity for carriers to enable their agents to find more personalized options for customers at a fraction of the time it typically takes.
Brokers add value to the health insurance experience of many consumer segments, and there is a lot more agents can incorporate into their recommendations through technology. For example, a small business owner in the retail industry might want to know what other similar companies in the area have purchased based on their demographics. Through better use of data at the point-of-sale, a broker should be able to make those suggestions with ease.
Streamlined e-commerce experiences and improved value are key for consumers across industries, including health insurance. Health insurance providers would benefit from incorporating things that the auto industry has been doing well already — using technology to incentivize healthy behaviors, having easy-to-understand information available on marketplaces, and utilizing data to help agents show personalized offerings.