Analyst firm Celent has qualified 22 European vendors providing policy administration system for health insurance and risk cover products during spring 2020. Among the 28 vendors presented in the most recent report, 15 did not qualify this time. In an industry that is under significant transformation, it is critical to have a core PAS that both ensures business agility and digital capabilities. Life insurers with a PAS core platform with capabilities also including health insurance products can extend their offerings of both their traditional individual and group insurance business lines to take advantage of this evolving market opportunity.
In the recently presented report, Health Policy Administration System: 2020 XCelent award, Celent reviews the European vendors meeting their qualifying requirements.
- Celent identifies three critical success factors and critical capabilities required for life insurers to prosper in the vibrant health insurance industry:
- Data – New data sources, Fitness and wearables, Diagnosis, Tariffs
- Mobility – Monitoring, Diagnosis, Care, Social health
- Engagement – Providers location, Wealthiness, Health coaching, Advice
Itello is the only Nordic vendor in the survey, providing support for the life and health insurance business line.
Itello is also the only Nordic PAS vendor in the last EMEA PAS report by Celent.
Health PAS – a swiftly changing industry and an immature health PAS vertical makes the selection of PAS vendor even more strategically important
Celent has done three reviews of the Health PAS vendor market over the past five years, and Itello has qualified for all of these reports, 2015, 2018 and 2020. The 2020 Celent study includes 22 vendors, nine of which are new entrants. Among the 28 vendors presented in the most recent (2018) report, a stunning 15 did not qualify this time. Our conclusion regarding the turnover of vendors is that it reflects a rapidly changing health and life insurance market. This has created a perfect storm, where vendors were unable to respond to their clients‘ new demands and have focused on other business areas. New cloud-based technologies and an increasing eco-system have allowed new entrants of vendors supporting digital customer journeys and digital distributions channels. Another driving force in the industry is a growing interest from re-insurance companies to offer underwriting platforms for distributors and life insurers with the need of extending and complementing their product offerings.
Besides, health insurers are no longer only underwriting health insurance. Nowadays they are also looking to more holistically support their customers at various times of their life, including their efforts to keep in shape and stay better informed about their health. Therefore, the spectrum of products and services offered by health insurance companies has flourished, and companies are focusing on building a health eco-system that adds value for the insured and clients. The new market conditions will require PAS vendors to support an extended product offering – either their customers underwrite or are using external underwriters.
Connectivity to the health insurance eco-system is critical for the new digital value chains
For life insurers seeking to be future-proof, agile and supporting digital distribution, finding a PAS vendor with the capacity to meet the continuously changing market requirement has become a necessity. Vendors with strong balance sheets and business models are the ones most likely to be able to deliver the outcomes required. Itello has the capability to successfully support customers who offer a combination of life- and health insurances and is the only Nordic vendor qualified in the report. Over the years, Itello has developed, and continuous extended the integrations with eco-system participants such as external underwriters, claims administrators, brokers, tied agents as well as to authorities and payment providers in the Nordic market.
Dual transformation required supporting decoupling of the traditional value chain
The traditional business model for the insurance industry is to provide and support the whole value chain, including owning the customer relationship. This has created a variety of multiple bespoke legacy systems during the evolution of the insurance industry. Due to external factors outlined above, the traditional approach supporting the organisation with numerous bespoke systems has become obsolete due to increasing inefficiency and a steep upward inclined cost curve.
The advantage is that the investment in a modern connected IT-system reduces the cost trajectory significant and enable increased automation and reuse of business rules and processes as well as established integrations and a connectivity network. The traditional business model will remain for the near future, but will in parallel be challenged with a new business model that requires a new way of supporting the operation to create business value, a decoupling of the established value chain.
The industry value chain of tomorrow will be more fragmented and specialized and will require connectivity to external partners. In its essence, every part of the value change is cherry-picked for the target segment addressed.
For insurance companies that want to prosper in the future, they need to have support for both the traditional and new business model.