Technology-driven insurer Lemonade is off to an excellent start on the stock market. Lemonade is sometimes referred to as the insurer of millennials and presents the textbook example of technological disruption; with a frictionless user experience, direct imbursement thanks to A.I. applications and a playful image, it emphatically seeks to align itself with younger generations’ motivations. This way, it’s building strong customer retention, which is often lacking in the established insurers. According to investors and consultants, the health insurance sector is next in line for disruption by these “insurtechs”. However, matters are more complicated in healthcare and digital innovation could lead to more problems and resistance here that could make customer retention more difficult.
What does this mean?
Tech disruptors often embody a new view of humankind, with different motivations. With its strong emphasis on a cheerful and playful interface, Lemonade is also turning against the image of man as homo economicus and focusing more on the homo ludens; the playing human. This strategy of appealing to younger target groups is, however, a risky one for a health insurer; it’s prone to being labeled as risk profiling geared towards young people with low health risks, which is illegal in many countries. After all, it undermines the solidarity of the entire care system. Furthermore, there’s a taboo against the use of health data and an insurer is only allowed to a limited extent to use it for personalizing services.
And yet, it’s understandable that health insurers want to bond more with consumers and to have a more proactive role in the health of their customers. To a health insurer, more data on patients and treatments equals more possibilities to organize care more efficiently and cost-effectively for society. That’s why insurers are seeking alliances to improve their customer retention through cooperation. Big tech companies are crucial in appealing to the homo ludens and promoting a vital lifestyle. Better adjustment to the services and ecosystem of big tech, as for example Vitality health is adjusted to Apple Watches, appears to be a strategic route. To generate trust and security around health data, insurers are more focused on cooperation within the healthcare domain. Digital companies such as CareVoice or apps such as Stresscoach and MS Sherpa could fulfill an important role for the insurer, but caution remains warranted regarding their revenue model and the responsible use of health data.