The Data Revolution in Health Insurance: How Analytics is Redefining the Industry's Future

For years, the potential of extensive and targeted data use has been a hot topic across industries, often described as the "new oil." The collection, integration, and professional analysis of ever-growing datasets promise valuable insights. In our work at the global IT company Infosys, we see that health insurers are not only recognizing this potential but are actively beginning to unlock it. From underwriting to claims and prevention, data is reshaping the health insurance value chain. But what specific trends are driving this change, and what does the future hold?

External Drivers: Regulation and Market Forces

Several key developments are accelerating the relevance of health data for insurers:

1. Regulatory Push: Political and regulatory changes are creating a framework for data utilization. In Germany, the electronic patient record (ePA) for statutory insureds is not only introduced but includes an opt-out provision to strengthen its use. The German government's Digital Strategy addresses "the use of health data" as one of three central fields of action, aiming to empower payers to use existing data in the insured's interest. However, as seen in disputes between data protection authorities and institutions like the Robert Koch Institute, significant challenges and differing viewpoints remain, highlighting the need for a clear legal foundation.

2. Market Competition: Major technology corporations are investing heavily in health, collecting user data for years. Furthermore, new players like Biolytica are entering the market with revolutionary, data-based business models. This Swiss company integrates health data (from genomics to wearables) on a single platform, uses deep learning for analysis, and provides insights via dashboards for clients and their care experts, with an overarching goal of promoting longevity through personalized health plans.

3. Rising Customer Acceptance: Surveys indicate that between approximately 50% to 70% of insured individuals are willing to share their data with their insurer for purposes like improved diagnosis, prevention, better treatments, or more favorable premiums.

Global Inspiration: Data-Driven Models in Action

The potential of targeted data use is multifaceted, ranging from improved care quality and cost savings to entirely new business models. Other countries are already pursuing interesting approaches:

• UnitedHealth Group (USA): Its subsidiary, Optum, extensively analyzes health data to optimize care networks, develop predictive models for chronic diseases, and manage population health.
• Oscar Health (USA): This insurtech company uses data and a member-centric app to guide users to appropriate, cost-effective care, leveraging data for a seamless member experience.
• Vitality (UK/International): While known in Germany through Generali, the global Vitality model is a prime example of using behavioral data from wearables and apps to incentivize healthy living, directly linking lifestyle data to insurance rewards.

For Context: These models show a clear trend also relevant for the U.S. market, where insurers like those offering Medicare Advantage plans or private coverage increasingly use data analytics for risk adjustment, care management, and member engagement, moving beyond mere claims payers to health partners.

A Future Scenario: "Data-Driven Connected Health"

Based on these developments, we envision a future scenario we call "Data-driven connected Health." In this model, providers emerge who can consolidate and analyze comprehensive customer health data on a unified platform. At the customer's request, they integrate various health information (e.g., treatment data, lab results, genomics, lifestyle) into a kind of personal health cloud. Using data analytics and AI on both aggregate and individual data, they generate personal health insights. Customers receive targeted guidance for maintaining or improving their health—from lifestyle changes to therapy options. They can also grant their treating physicians access to this data for more precise diagnoses and personalized treatments. Due to the clear value for personal health and high convenience, this offering is adopted by the majority. These providers become the first point of contact for health questions and, consequently, the central player in the healthcare system.

The Central Question: Who Will Be This Key Player?

This scenario raises an essential question: Who will assume this central role? Several actors are contenders:

• Health Insurers: They already possess vast amounts of customer health data and are taking the next step with offerings like the ePA. However, they are not guaranteed this role.
• Healthcare Providers: Hospitals or physician networks have direct treatment data.
• Technology Corporations: Companies like Google, Apple, or Amazon have scale, technical infrastructure, and user trust in digital services.

It's also conceivable that new cooperation or partnership structures will emerge, for example, between insurers and technology service providers. Success will depend on creating the necessary prerequisites: building customer interest and trust, establishing regulatory foundations, and developing the required competencies.

Four Key Action Areas for Health Insurers

For health insurers, it will be crucial to consciously decide on their future role and then deliberately build the necessary new capabilities, especially in data management. Based on our experience, we see four central fields of action:

1. Define a Clear Data Strategy: Determine strategic goals for data use (e.g., cost reduction, new services, improved care) and establish governance.
2. Build Trust and Ensure Compliance: Implement transparent data policies, ensure strict data protection, and communicate benefits clearly to customers.
3. Develop Technological and Analytical Capabilities: Invest in modern data platforms, cloud infrastructure, and AI/analytics expertise.
4. Foster Ecosystems and Partnerships: Collaborate with tech companies, healthcare providers, and startups to access complementary data, technologies, and expertise.

The current developments in health data utilization, along with looking at other countries, strongly suggest that health insurers should develop their future role and data strategy now. By doing so, they can convince customers from the start with their own offerings and added value. Otherwise, they risk other providers' offerings becoming so entrenched that customers will use them and not switch.

Insurers and brokers struggle in claims management with high backlogs, increasing claim frequencies, a shortage of skilled workers, and growing customer expectations. Manual processes are expensive and slow.