Muang Thai Life Assurance and Swiss Reinsurance are testing a policy for chronic disease in Thailand that their officials say is setting a new model for using digital tools to develop new business segments.
The collaboration, which uses customer-facing apps designed by Hong Kong biotech startup Prenetics, involves reshaping an approach away from passively waiting for people in strife to make a claim, to one that helps consumers mitigate their need to make a claim at all.
Nadia Suttikulpanich joined as head of Fuschia Innovation Labs, the in-house digital lab of Muang Thai, two years ago from a consumer retail background. “Coming to insurance, I saw how far removed it is from the customer,” she said. “As a consumer, in your time of need, insurance isn’t there.”
She was also unhappy with what she calls “gimmicks” from many insurers, which try to sell life or health plans using giveaways like movie tickets that have nothing to do with improving the customer experience.
The most underserved people who could otherwise afford normal insurance are those with chronic diseases. They are usually denied insurance of any sort, because of their pre-existing conditions, or who can only get insured against severe events that result from their disease (amputations or blindness, for example) at ruinous prices.
Fuschia decided to experiment with diabetes, a chronic disease that has become prevalent in Thailand and other emerging markets as lifestyles have changed.
Prevention better than the cure
Diabetes, if not treated, has horrifying results, but the right diet and proper exercise can allow many people to avoid the worst and live normal lives. Moreover, that behavioral change can be measured, with sugar levels in the blood as a reliable proxy.
For Fuschia, this was an opportunity to introduce digital services that would let Muang Thai have an ongoing engagement with its customers, helping them manage their lifestyles in return for more favorable pricing. If successful, it can also reduce the number of claims for the most severe outcomes, thereby both reducing payouts from Muang Thai as well as reducing tragic health problems.
To realize this idea, Muang Thai tendered an RFP for partners and handed the mandate to Swiss Re, which not only brings data and risk expertise, but an ability to bring design thinking to the project, says Suttikulpanich.
Bringing in partners
Sohila Kwan, director and Asia head of health and medical solutions at Swiss Re, says insurers have traditionally struggled to make health policies work economically. Regulations in most places don’t curb what hospitals and clinics charge for treatment, making health reimbursement a lossmaker for insurers.
But a combination of providing better value to customers, data analytics to customize policies, and the rise of “lifestyle” diseases such as diabetes in emerging markets are creating ways for the industry to begin addressing what it sees as a big and growing market.
“Chronic disease is a new risk pool,” Kwan said. “Primary insurers don’t have data, but they want solutions.”
The service launched in Thailand in April, as part of the Office of Insurance Commission’s regulatory sandbox. The partners hope to sell 1,000 policies. Muang Thai is offering two-year contracts for Type 2 diabetes. At the start, consumers get a blood test, and are encouraged to do so in six-month intervals; if their glucose levels improve, their next premium is reduced.
To make this more relevant for people, Muang Thai and Swiss Re have brought in Hong Kong-based Prenetics, a genetic testing startup that is backed by Alibaba Hong Kong Entrepreneurs Fund and Beyond Ventures, among others.
Prenetics designed an app that reminds, prompts and encourages users to stick to healthy diets – in Thai language, with local dietary understanding. The data becomes the property of Muang Thai, which uses it for prices. Muang Thai is also experimenting with how to manage claims in this kind of product.
The insurers also lined up hospitals and clinics in Thailand where policyholders could get regular tests.
The insurance executives decline to compare their pricing to other products, saying this is the first time chronic diseases have received coverage in Thailand. The policy, while it does cover the extreme cases if the disease progresses, also offers standard health insurance for routine ailments unrelated to diabetes.
In your time of need, insurance isn't there
If it works, Swiss Re hopes to roll out similar products elsewhere. She says one in 11 adults worldwide is diabetic, and 60% of those are in Asia. But it requires local healthcare and pharmaceutical partners, as well as apps that embed nutrition and exercise support in local cultures. The concept can extend to other chronic conditions, too, such as heart disease. “Our vision is to take this beyond diabetes,” Kwan said.
The insurers say their metrics for the project involve whether it really changes consumer behavior. Will people take to the app? Will they make measurable improvements in their lifestyles?
Chronic disease is a new risk pool
And then the product will have to be seen as a profitable exercise. But for now, the focus is on learning from the experience. They hope that by doing good, they can also grow their businesses.
“Insurance can include the sick and not just be for the healthy,” Suttikulpanich said.