The consistent challenge of loss ratios has been a recurring issue for health insurance companies. Numerous health insurers across Europe are grappling with the pursuit of sustainable growth in the face of mounting healthcare expenses, increasing consumer demand, regulatory shifts, and a proliferation of partnership and business model options reshaping the industry.

Many health insurers resort to raising their prices in order to mitigate loss ratios. At the beginning of 2023, major health insurers around the world announced price hikes. Policyholders face double-digit price increases, a measure insurers believe is necessary to maintain profitability, albeit challenging the affordability for their policyholders. This struggle to strike a balance between profitability and affordability mirrors the broader issue faced by health insurers worldwide in their struggle to improve loss ratios.

Another noteworthy development in the healthcare landscape has been the growth of virtual healthcare and telemedicine, a trend that has gained momentum, particularly during the COVID-19 pandemic, and continues to thrive. Despite their undeniable advantages and popularity, these services come with significant costs. Many current providers offer these services for free and without restrictions, which is unsustainable in the long term, posing an economic challenge.

An article in Health & Protection highlighted the surging demand for online doctor consultations, with a reported 37% increase in virtual GP service demand. However, insurers are wrestling with the high costs associated with traditional telemedicine models, jeopardising this valuable health benefit for their members. There is concern that insurance companies may take away some of these important and incredibly popular services to mitigate the risk.

For private health insurers, the question is how to innovate across product offerings, distribution, operations, and medical cost management in a manner that expands their customer base and addresses the escalating healthcare expenses.

Effects of Tech and AI on Healthcare Insurance

Artificial intelligence (AI) is often mentioned when health companies and insurers want to innovate. How exactly can AI help insurers? In a thought-provoking discussion at ITC DIA Europe Barcelona, Abi’s Co-Founder & CEO, Kim-Fredrik Schneider discussed the latest insurtech innovations that are reshaping the industry and ultimately improving the lives of policyholders.

The discussion centered on how insurers can positively impact customer health by leveraging technology to provide greater value while simultaneously reducing costs. This perspective challenges the traditional notion of minimising services to improve loss ratios.

It's evident that there is a pressing need to transition away from the traditional model of reducing services to manage loss ratios. “I think many insurers are stuck way before the internet age, where there’s this fundamental paradigm that the way to improve loss ratios is to give people less. In particular, in the way claims management is set up: give people less, to make more money.”

Technology enables us to give people more in ways that are economically more efficient and profitable. However, it is not just about having the right technology. The key lies in the strategic deployment of technology. While many health insurers already offer telemedicine services as part of their core services, merely substituting in-person visits with video calls may not lead to cost savings and could even increase healthcare expenditures.

To explain this, Schneider said, "If you're replacing a 15-minute face-to-face visit with a doctor, with a 15-minute video visit with a doctor, you're not going to save much money if anything at all. In this case, you're providing more service, but healthcare costs go up. During Covid, in particular, healthcare costs went up and it was creating more stress on the system. You're taking one thing and doing it in a different format but in an analogous way."

Schneider advocates for the integration of technology into medical consultations to make them more efficient and cost-effective, a concept exemplified by Abi’s Next Generation Virtual Care platform and its utilisation of AI tools.

“Our view on telemedicine is that technology has to enter the consultation itself. That’s what we do at Abi. We’ve created our own in-house suite of AI tools that make the consultation itself more efficient and deliver a better customer experience with more support on demand. This is done in a way that actually reduces health care costs because the consultations are cheaper and expensive interventions are avoided.”

Abi’s Next Generation Virtual Care Platform

Abi's services offer a variety of options to members, including text, voice, video, and prescription virtual care services. What makes the Abi platform different is the use of an AI-powered allocation engine that connects members to healthcare professionals in 40 seconds or less. The AI, using Machine Learning and Natural Language Processing, understands the nature of the member’s medical query and sends this message to the available healthcare professional with the correct specialisation. Therefore, queries are resolved right away and members don’t have to wait days or weeks for a video call or in-person visit to a doctor. 

In the traditional telemedicine model, insurers shoulder the cost per visit or a set number of minutes for a call with the medical professional. With Abi’s Next Generation Virtual Care platform, insurers are only required to pay for the time spent by the doctors with members. 

This comprehensive range combines the efficiency of artificial intelligence with the assurance provided by licensed doctors and healthcare professionals, giving members the best of both worlds.

One of the standout features of Abi’s services is the utilisation rates, with engagement rates far exceeding traditional telemedicine platforms by as much as 3 times, and activation rates frequently reaching an impressive 80%.

Because of the trust members have in the Abi platform and high utilisation rates, there is a 76% reduction of doctor visits across all insurance members. This mutually beneficial outcome leads to reduced loss ratios for insurers and a more favourable return on investment for all stakeholders.

The Future of Health Insurance

Rather than limiting services and withholding access from policyholders, health insurers can enhance their offerings and provide more efficient care to their customers, all while reducing costs, by leveraging innovative technological solutions like those offered by Abi.

Book a demo with Abi’s business development team for more information on customised insurance solutions.