Interview with Sean Conrad and Lisa Balboa on Life & Health InsurTechs and the Role of the Reinsurer
By Sean Conrad and Lisa Balboa
Reinsurance News, October 2023
Sean Conrad is VP & actuary at Hannover Life Reassurance Company of America. He is responsible for pricing and client consultative activities related to accelerated underwriting, digital distribution, automated underwriting, data/analytics, and innovation.
Lisa Balboa is head of Hannover Re’s global L&H Digital Business Accelerator and a Fellow of the Institute and Faculty of Actuaries. The L&H DBA is a cross-functional innovation network that aims to harness the opportunities arising from technological developments, in areas such as digital distribution of insurance and unlocking the potential of digital health data for insurers.
What are the opportunities for reinsurers to work with InsurTechs?
Lisa: In life and health insurance, we see opportunities for reinsurers to work with InsurTechs in terms of both InsurTechs who are full-service insurance players and InsurTechs serving as value-chain enablers. New full-service InsurTech entrants often look for reinsurance capacity and expertise when launching their insurance offering. Globally, we’ve also seen a growth in the number of InsurTechs serving specific needs of insurance companies at different stages of the insurance value chain from distribution through to underwriting, customer engagement, and claims. Reinsurers are well placed to work together with InsurTechs to add value to traditional primary life and health insurers. With the rapid pace of digital change, reinsurers can partner with InsurTechs to enhance processes in areas such as underwriting, risk assessment, and claims handling, as well as to support insurers in leveraging new technologies for distribution and ongoing customer engagement.
Why/How do you work with InsurTechs in US?
Sean: InsurTechs have the ability to execute quickly and a drive to try new things, so our own innovative culture and willingness to intelligently test and learn fits very well with this. We have found InsurTechs to be good partners for implementing and testing new tools and strategies that have helped us develop best practices and identify broader use cases for the traditional market. Our approach to working with InsurTechs is centered around our purpose statement: “Beyond risk sharing—we team up to create opportunities.” We look to partner with InsurTechs whose skills and capabilities complement our experience and expertise as a reinsurer. This creates opportunities to be more successful together than either party would be on their own.
What digital & innovation focus areas are on your radar?
Lisa: Globally, we see digital health data and digital distribution as two focus areas.
For digital health data there is a broad spectrum of data available ranging from wellness data such as physical activity through to more medical data such as electronic health records. There are opportunities to use this digital health data to streamline and augment the underwriting journey, as well as to improve claims processes. One emerging global trend is the role of digital health tools, such as smartphone apps, to help customers live healthier and longer, as well as for early disease detection and management for conditions such as skin cancer and heart arrhythmias.
For digital distribution, we’re seeing growth opportunities in the direct-to-consumer space in a number of key markets. Across direct-to-consumer, bancassurance and agent/broker-led channels, there are also opportunities to incorporate digital to better understand customers’ purchase intent at the point of application and to identify and reduce friction points in the underwriting journey.
How have you worked with InsurTechs in the digital distribution space in the US?
Sean: We have been very active in the digital distribution space, initially focused on direct-to-consumer distribution and more recently on partnering with insurers to develop digital processes and products for agent/broker distribution. Our experience and expertise in automated underwriting, mortality, and data analytics is a nice complement to our InsurTech partners’ digital marketing capabilities and focus on creating a great customer experience. Together, we have been able to develop fully digital processes that deliver a good customer experience, a high automated decision ratio, and competitive prices.
What’s next for digital distribution?
Lisa: An area of future potential for digital distribution is the role of digital data and analytics in enabling new business models and empowering insurers to increase customer lifetime value. For example, one opportunity could be to partner with online retailers or technology companies to create embedded life and health insurance products. Another emerging trend is to explore the potential use of analytics to enable the sale of additional insurance products to customers, based on the use of digital data to proactively understand and cater to customers’ changing life and health protection needs.
How do you partner to use digital data for underwriting in the US?
Sean: We have partnered with several companies to conduct collaborative studies on new data sources or risk selection tools. Examples include LexisNexis Risk Solutions, Milliman IntelliScript, ExamOne, and ForMotiv. Collaborative studies enable us to analyze data, evaluate the strengths and weaknesses of the data/tool, and think about potential use cases. Our analysis provides an independent validation of the effectiveness from a risk taker prepared to reinsure business that utilizes the data.
When we identify data/tools that improve risk selection, we use them in our digital distribution programs, looking for places where they could help clients address specific goals or risks they have, such as increasing automated underwriting decisions, increasing acceleration, or reducing mortality slippage for accelerated underwriting programs. As we use the tools and work with the data more, we continue to refine our views on best practice and the potential use cases. An example of this is our work with ExamOne and the development of the hr | ReFlex Select rules for LabPiQture, which have enabled us to achieve higher auto-decision rates and extract more protective value from the clinical lab data in LabPiQture. Our work with Milliman IntelliScript and our collaborative study of medical claims data is another example of how a deeper understanding of the data and potential use cases can help us to make more automated decisions while maintaining or even improving mortality.
What are the other opportunities for digital health data beyond risk selection?
Lisa: Beyond risk selection, there are opportunities to leverage digital and medical developments to support customers in understanding and managing their health risks. One example is our partner LifeQ who provides biometric insights from wearable devices. They provide policyholders with insights into heart health, sleep, fitness and activity, which customers are incentivized to use to guide improvements in their health. The latest LifeQ technology also enables disease flagging for chronic conditions such as sleep apnea and acute diseases such as respiratory infections. This early detection capability can enable life and health insurance customers to seek early treatment before their condition becomes more severe, thereby helping to reduce the severity of claims for the insurer as well as enabling better health outcomes for the customers.
There’s also an opportunity for digital and medical developments to support new products. For example, our partner healthŌme works with carriers to provide an insurance product that combines the latest digital and medical developments in the cancer space. The policy provides customers with upfront hereditary risk screening for cancer together with genetic counselling and recommendations on how to reduce cancer risks. Policyholders who are diagnosed with cancer receive financial payouts under the policy, along with healthŌme navigation services and access to the latest genomics-based cancer diagnostics to inform treatment. The genomic information about their cancer also increases the policyholder's access to relevant clinical trials that are the new "gold standard" for their cancer treatment. Recurrence monitoring support is also provided to help those in remission detect cancer recurrence sooner. This type of product demonstrates the opportunities that digital enables when it comes to combining medical science with the latest digital technologies to support and empower customers to access the best possible treatment for their particular condition.
What are the top three challenges for reinsurers when working with InsurTechs?
Sean: Alignment of interests can be a challenge and is something we are very focused on when evaluating new opportunities and partnerships. Understanding each party’s goals and KPIs (key performance indicators) is important, and you want to feel comfortable that they are compatible.
Quantifying the benefits or proving the use case for new risk selection tools can be tough because historical data may not be available, or it may take a long time for credible experience to emerge. Therefore, it is important to identify and monitor leading indicators that provide an expectation of how things will develop. To the extent that changes are needed, we want to identify them early and adapt.
Another challenge is the “unknown unknowns” associated with a new program or partnership. As much as you try to anticipate or hypothesize all the various things that might happen, there are bound to be surprises that you need to react and adapt to. Identifying these quickly, understanding the expected impact, and adjusting appropriately is important for long-term success.
What words of advice do you have for InsurTechs looking to work with reinsurers?
Lisa: For full-service InsurTechs looking to work with reinsurers, one piece of advice would be to think through underwriting and claims assessment processes or else be transparent with the reinsurance partner where their support and input can add value as part of the overall insurance process. For value-chain enabler InsurTechs looking to work with reinsurers, some advice would be to be curious to learn more about the role of the reinsurer in supporting insurance clients across the value chain. This approach can help insurers, reinsurers, and InsurTechs to explore potential ways to work together to create solutions that better service the needs of insurance customers.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.
Sean Conrad, FSA, MAAA, FIA, CFA, is VP & actuary at Hannover Life Reassurance company of America. He can be contacted at Sean.Conrad@hlramerica.com.
Lisa Balboa, FIA, is head of L&H Digital Business Accelerator at Hannover Re. She can be contacted at Lisa.Balboa@hannover-re.com.