While Digital Healthcare & InsurTech both heavily involve the use of information technology and artificial intelligence and both have the end goal of empowering the end-user, they do so through different means.
Digital Healthcare involves the use of apps and various devices to provide the patient and medical professional with a more holistic view of the patients’ health to make better health-related decisions, whereas InsurTech refers to the use of technology innovations designed to increase the efficiency of the current insurance industry models.
Both sectors may overlap where Digital Healthcare is used as part of InsurTech to enable insurers to develop more curated products and reduce cost inefficiencies.
2020 Performance of the APAC Digital Health & InsurTech Segment:
In 2020, the APAC Digital Health ecosystem raised USD 6.14bn in venture capital funding, 25% higher compared to 2019. Going hand in hand, APAC-based InsurTechs attracted USD 1.4bn, up 15% from the previous year.
The average deal size within the digital health space in 2020 was USD 26.4m, up 55% from 2019, largely driven by the second half of the year. Within the transaction activity, 21 “Mega Deals” (>USD 100m) were closed in APAC in 2020, up by eight deals compared to 2019, with a strong uptick in the second half of the year when 17 deals were closed [1]. Within the InsurTech segment, deal flow was driven by companies headquartered in China (USD 800m) and India (USD 450m). Examples include Medbanks, a medical database-services company offering oncology-related services, which raised USD 305m in Series E+ funding; and Policybazaar, a price-comparison portal that raised USD 130m in Series E+ funding [2].
2020 turned out to be an exciting year for InsurTech. The record-breaking amount of equity funding invested in the space, as well as numerous M&A deals, IPOs, and strategic reinsurer contributions showed that technology is playing an increasingly key role in the evolution of the industry.
“It is now time for incumbent insurers to accelerate their digital transformations and acknowledge the strategic role that InsurTechs, as well as Digital Healthcare companies, can play in helping them rapidly adapt to, and survive in, a post-COVID-19 world.”
The health insurance sector is ripe for innovation:
By their admission, and despite ongoing efforts, incumbent insurers struggle to produce innovative products. The sector comes second to last in an innovation ranking by BCG [3] . No insurer ranks among the world’s top 1,000 public companies by amount invested in research & development. In addition, a survey conducted by McKinsey & Company shows that while 82% of insurance executives said they consider product development a core competency, only 12% believe their companies have a process that produces innovative products [4].
These same executives also struggled to name products from the industry that they considered truly innovative. Effective product innovation is tied to a deep understanding of customers’ emotional and practical needs and wants, paired with the ability to quickly get those products to customers—a departure for many incumbents’ default philosophy of aiming to be fast followers. Consequently, traditional insurers demonstrate a relative lack of both understanding and ability compared with their InsurTech and Digital Health counterparts. This factor could be one of the primary reasons that account for low penetration of traditional insurance products in Asian markets.
Given these factors, insurance leaders in Asia should focus on developing their customer insights capabilities, optimising existing product portfolios and improving their approaches to product innovation. Insurers that succeed in the region will be those that can use their understanding of customers to partner with the correct digital offering and market this quickly through the most relevant channels.
Case Study: DocDoc
DocDoc is a Singapore-headquartered digital health platform which combines the power of artificial intelligence with human expertise to help patients find the highest quality medical care at optimal prices. The company boasts Asia’s largest and most comprehensive healthcare network with thousands of doctors, clinics, and hospitals from a wide spectrum of specialties in eight countries. It focuses on addressing each patient’s unique needs by providing reliable data on medical prices along with the doctor’s background and expertise in treating a particular condition. The company further leverages its proprietary platform to match patients with the right doctor, based on the doctor’s unique expertise as measured by outcome, price, and experience.
Studies have found that even in developed countries such as the United States, only 12 per cent of people have sufficient literacy to navigate the system and even those individuals can struggle when they are feeling unwell and vulnerable [5].
Patients utilising the DocDoc platform will have the relevant data points they need to make an informed decision on the appropriate healthcare and doctor of their choice. Moreover, DocDoc follows the patient throughout their healthcare journey, providing virtual care services and digital claims processing services as and when suitable.
Distribution of DocDoc’s services primarily occurs via a health policyholder channel rather than direct marketing to potential patients. This is significant as patients are directly provided by insurance companies in the form of policyholders.
Another key feature is competitive pricing in the form of choices of doctors and treatments from its database. By directing patients to high quality inexpensively priced doctors at a procedure and condition level, DocDoc improves the patient’s experience while simultaneously optimising healthcare spending. As treatment costs (and actual insurance claims) reduce over time and fraud, waste and abuse are detected in real-time, insurance companies will pay less towards the cost of policyholder treatment plans, and this could lead to lower premiums being paid by policyholders. Insurers utilising DocDoc’s offerings will not only benefit from reduced claims cost but will be able to heavily differentiate themselves amongst their peers and therefore command a larger share of a homogeneous market. DocDoc utilises its data analytics capabilities to enable insurers to prevent claims disputes, tackle rising healthcare costs, predict claims and disease trends, and proactively steer their business using data.
In 2020, DocDoc secured a strategic partnership with insurance risk-control firm Kaitaiming Technology (KTM) to expand its reach into China. KTM helps insurers to manage and control claims risks, reduce claims costs, and improve service efficiency and quality, and is backed by investors such as Sequoia Capital, Matrix Partners China, China Everbright Trust and Qianhai Reinsurance. Customers include Ping An and China Pacific Insurance Co. Integrating DocDoc’s doctor discovery platform into KTM’s insurance agent application will enable DocDoc to reach the policyholders of China’s top insurance companies.
DocDoc’s offering is poised to dramatically disrupt the InsurTech and Digital Health space in Asia. With the ever-growing need for innovation by incumbent insurers and corporates, DocDoc’s services are likely to contribute to the demand for differentiated, knowledge-based products that ultimately empower the patient.
About the author
Suresh Withana is a Co-Founder and the Managing Partner of Harmony Capital Investors Limited, Jade Road’s investment manager. Prior to founding Harmony Capital Investors Limited, Suresh was most recently Global Head of Special Situations and Co-Head of Asia at Tikehau Capital, the listed investment management company with approximately €10 billion in assets. In total, he has accumulated 25 years of experience, including over 13 years of special situations investing, primarily focused on Asia.
References
1 Galen Growth (FY 2020 Asia Pacific Digital Health Ecosystem Report)
2, 3 BCG (The Pandemic Pushed Insurtech Funding to an All-Time High)
4 McKinsey & Company (Product innovation: The new imperative for insurers in Asia)
5 Second Opinion (Why navigation has become the next big thing in digital health)
