Celent discusses future-focused technologies for health insurers

It may be counterintuitive given global economic uncertainty, says Tom Scales, health practice lead with Celent, but the research and advisory firm focused on technology for financial institutions believes now is the time for insurers to invest in technology. They highlight several areas to invest in to achieve transformation in health insurers’ businesses in a recent webinar, Health Insurance in a Post Pandemic World. 

The focus areas discussed will apply across multiple lines of business, they say. For the sake of the webinar in question, however, panelists focused on health insurance. 

Convergence  

The convergence of artificial intelligence (AI), analytics and cloud adoption was the first trend in the list itemized by Scales and Nanda Rajgopal, principal insurance analyst with Celent. They say organizing a company’s data in a cloud-based repository is a great starting point for companies. “Data and cloud and AI large language models are key to automating and improving operational efficiencies,” Rajgopal says.

He adds that it is therefore imperative to establish a sound data strategy and work to organize the data a company holds. Governance is also part of that data strategy. “Governance actually provides a specification of decision rights, accountability framework and guidance for effective data management. Data literacy, training and development will go a long way in building a data-driven culture. It’s about training in general and creating the right talent to manage the data. It’s not just creating a strategy and implementing, you also need to be able to manage it on an ongoing basis.” 

Generative AI 

Once the data is organized, only then will firms be able to more fully train various AI models using machine learning techniques. These efforts, Rajgopal says, can generate outstanding decision support analytics.

Generative AI, he says, refers to a category of models designed to generate new content. “Unlike other AI models that are focused on classification or predictive tasks, generative models aim to generate original and creative outputs.” 

Regular AI models, he says have been applied very effectively in actuarial modelling use cases, automated underwriting, auto claims adjudication and more. “Generative AI and algorithms provide an opportunity to improve on traditional AI models to generate better results.” 

At the moment, Rajgopal says most companies are still at a very early starting point with AI, looking at different use cases, but adds that those who don’t innovate and keep up with the times will be left behind.

Innovation  

Innovation, Scales says, is table stakes today. “This is really critical to your organization,” he says, adding that those efforts which have been successful in the past have already been done or run their course. How companies invest going forward will depend on their appetite for innovation.

“How should you be investing to ensure that you’re not just solving 2024’s problems, but 2029 and 2030?” he asks. “It’s time to differentiate your organization based on how innovative you can be right now.” 

Efficiencies and automation  

The inflationary environment, meanwhile, continues to persist, driving costs higher for everyone, including health insurers. This, in turn, is driving health insurance providers to look for more ways to drive operational efficiencies, automate and cut costs, Rajgopal says.

Touchless claims is an example of automation, he adds, describing a customer experience example where automation-enabled straight through processing, using readily available data that is effectively analyzed during the claims process. This occurs regardless of the customer’s preferred communication channel and the claim is adjudicated in an equally seamless manner. “Insurance can utilize a combination, again, of data, cloud, AI technologies, along with their core claims systems, to build such a customer experience,” he says.

Back-office systems  

Probably the least exciting but most important topic on the agenda, Scales says, is the matter of insurer’s back-office systems.

“To implement everything else we’ve talked about so far, you need the ability to get data in and out of the system of record, the policy administration system, the revenue system, whatever your company calls it. The challenge is that many companies, perhaps yours included, are running technology that is very old.” 

This technology, difficult to support because it is sometimes written in languages which programmers no longer even study, is generally not API (application programming interface) enabled either. “It’s difficult to integrate both the front end and the back end and pretty much everything wrapping around the core systems without those APIs,” Scales says. “Now may very well be the time for your company to invest in a new core system or a refresh of your core system. Of all the systems that are important to your organization, the core system is foundational.” 

Vendors and carrier’s buying intentions 

As for how different insurance providers are investing, Celent says only 16 per cent say they are going to develop the tools they need internally; 50 per cent say they are going to buy an entire package from one vendor and 11 per cent say they are going to develop what they need with an external partner. “Usually that means that they’re starting with a package but they’re working with a vendor because they want to enhance it,” Scales says. He adds that 21 per cent say they are going to get best of breed components from multiple vendors. “Again, that is often everything but claims, and then a separate vendor for claims,” he adds. “We do see almost all implementations of new systems going into the cloud.” 

To conclude, Rajgopal circles back to the task of first organizing a company’s data. “I hope insurers get excited about organizing their data and evaluating and looking at their data strategy because that’s what’s most important in making these models realize or come to value.”