Interactive Health Insurance Emerges as the New Paradigm: How Technology, Platforms, and Insurers Redefine Roles in Digital Transformation

Amid the wave of digitalization, the traditional insurance industry is also undergoing a transformation. In its late-2018 forecast of industry trends, the renowned consulting firm Frost & Sullivan noted that existing health insurance policies have become outdated and fail to meet individuals’ personalized needs. Technological solutions, health management platforms, and insurance companies form the “iron triangle” driving this digital transformation.

As a pioneer in domestic health management practices, Miao Health has leveraged its strengths in health services and health technology to witness and participate in this transformation. Recently, VCBeat conducted exclusive interviews with Lin Junfeng, Vice President of Miao Health, and Qi Zhen, General Manager of the Miao Health Business Unit, to jointly explore the current bottlenecks and solutions in the health insurance sector. The discussion covered key questions such as: What challenges is health insurance currently facing? How do technological tools, health management platforms, and insurance companies each fulfill their respective roles within new models? And what results have been achieved so far by Miao Health’s innovative insurance model?

According to a report released by Frost & Sullivan, the growth rate of the health insurance industry is projected to be below 1.5% in 2018. To ensure future growth in global insurance revenues, many insurers have begun providing data- and digital-driven healthcare services to their policyholders, thereby reducing potential claims costs.

Lin Junfeng, Vice President of Miao Health, identified three major pain points in traditional health insurance and even the broader traditional insurance industry, based on his observations from over a decade of experience in the insurance sector:

First, with the emergence of new types of internet-based insurance products, although insurance marketing has shifted online and theoretically broadened sales channels, customer acquisition costs remain persistently high. Lin Junfeng stated, “Typical customer acquisition costs range from RMB 50 to 100, while costs for acquiring high-net-worth clients are even higher.”

Second, the emergence of new insurance products has lowered entry barriers, but these products also face adverse selection and moral hazard risks. Overly lenient preconditions and lax customer underwriting criteria have led to an increase in claims.

Third, all health management and insurance companies face pressure to expand their markets. Insurance policies adhere to certain “rules of the game,” with different rules often corresponding to varying coverage amounts and benefits. For non-professionals, rights and protections are not always clearly understood, resulting in significantly high costs for market education.

“Most customers actually have little understanding of insurance. The common practice among insurance companies is to recruit agents and drive sales through trust-based relationships, which often leads customers to overlook whether the insurance products are suitable for them, leaving them trapped in a ‘purchase circle’.”

Furthermore, Lin Junfeng emphasized that most customers view insurance merely as a purchase of risk protection, neglecting their physical health, which has led to an increased claim incidence rate. Therefore, in the current health insurance market, controlling cost incurrence is a critical issue that needs to be addressed.

Qi Zhen, General Manager of the Miao Health Division, believes that the pain points of traditional health insurance are prominently manifested in low interaction frequency and high communication frequency. The emergence of new types of insurance has enhanced interactivity between insurers and users. From the user’s perspective, such interactions help individuals better manage their health and reduce the likelihood of illness. From the insurer’s perspective, this approach appropriately reduces intrusive communications while increasing health-beneficial interactions, thereby improving service quality and enhancing user stickiness.

As a series of issues stemming from previous extensive management practices have come to light, the transformation of traditional insurance is essentially a quest for “redemption” amidst adversity. The emergence of interactive insurance products, designed by More Health in collaboration with insurance companies, aims to leverage technological means to build a “bridge” in the form of an interactive health management platform between customers and insurers.

In November 2018, traditional life insurance giant John Hancock announced that it would cease selling traditional policies and shift its focus to interactive policies supported by wearable devices. Meanwhile, China’s health insurance industry has also begun exploring new initiatives.

As the health management platform with the largest user base in China, Miao Health has, after more than three years of exploration and serving 60 million users, built a comprehensive empowerment service system centered on health data tracking, AI-driven health interventions, and gamified operations. This system helps insurance companies enhance customer acquisition and conversion capabilities, develop differentiated insurance products, improve user affinity and stickiness, and reduce claim ratios, while simultaneously assisting users in continuously improving their health behaviors to achieve the ultimate goal of extending lifespan.

When Hengkang Insurance leveraged wearable devices to assist in managing the health of its insurance clients, Miao Jiankang similarly capitalized on its connectivity capabilities. By serving as a data entry point through wearable devices or manual input, Miao Jiankang collected user data to gain initial insights into users’ health profiles. The platform then employed artificial intelligence algorithms to customize health tasks for clients. Upon completing these tasks, clients were rewarded with increased coverage amounts, thereby delivering a complete suite of innovative health insurance services.

High interactivity, strong user stickiness, AI algorithms, tagging, and customer profiling are the key components of new interactive insurance policies. The core logic of More Health’s interactive insurance model is to achieve high-frequency engagement through data tracking, enabling users to earn health rewards.

Lin Junfeng stated, “In addition to the use of wearable devices, artificial intelligence is a crucial technology in interactive insurance policies. In Miao Health’s practice with interactive policies, AI technology leverages big data algorithms based on Miao Health’s data-tracking capabilities to assign various tags to customers. It continuously redefines customer profiles during interactions to generate more accurate user personas, thereby recommending new health plans and delivering personalized, customized solutions that are continually refined with daily data inputs.”

Looking back, what is the true purpose of customers purchasing insurance? From a results-oriented perspective, it is for claims settlement; however, at its core, it is about risk control. The integration of technology leverages internet and Internet of Things (IoT) solutions to address the low-frequency interactions between insurers and policyholders, thereby providing health protection. After purchasing insurance, customers should experience health promotion and improvement throughout the policy period. In this context, the role of insurance extends beyond merely being a post-event “payer.” Technological advancements have brought about a triple transformation in the insurance industry, encompassing user experience, distribution channels, and marketing strategies.

Insurance provides products, platforms empower capabilities, and technology serves as the means; the collaboration of these three elements constitutes the digital transformation of the insurance market. In the process of delivering interactive insurance experiences to customers, the capabilities of health management platforms are both validated and tested.

Lin Junfeng told reporters that Miao Health has currently partnered with nearly 30 insurance companies in China, providing them with health services. It is also exploring interactive policy businesses with insurers such as Pacific Insurance, PICC Health, and Aeon Life, tailoring comprehensive health management solutions for insurance customers. For the proprietary e-commerce channels of insurance companies, Miao Health also offers sales of health hardware and health services. Additionally, Tongren Insurance Brokerage, a subsidiary of Miao Health, assists insurance companies in product design by customizing new products and policy services.

Frost & Sullivan’s research indicates that by the end of 2019, 5–10% of health insurance plans would be linked in some form to interactive policies driven by lifestyle and health data. Interactive policies will continue to gain popularity globally, as they enable insurers to leverage individual data for personalized premiums, discounts, and rewards.

The effectiveness of interactive insurance policies has long been validated abroad. In 2015, John Hancock launched the “Vitality Program,” an initiative based on health behavior data and health management, to encourage customers to adopt longer-lasting and healthier lifestyles, quickly yielding significant changes. Through this program, more than 3 million health activity data points have been generated, with policyholders taking nearly twice as many steps as the average American. Policyholders interact with the company an average of 576 times per year, a substantial increase compared to the one or two interactions typical in traditional insurance models.

In China, the market has also seen the emergence of numerous insurance products that dynamically adjust coverage amounts based on health services or interactive mechanisms. Examples include Ping An Insurance’s “Ping An Fu Run” program and Tencent’s WeSure “WeFit” program. These products are characterized by their “interactive” concept, primarily determining adjustments based on users’ daily step counts, similar to WeChat Sports and the built-in activity tracking features of iOS.

Qi Zhen emphasized that while interactive insurance highlights the concept of interaction, it must also ensure the effectiveness of subsequent health interventions for users. Different population groups require tailored health solutions; a single task trajectory cannot differentiate between healthy and sub-healthy individuals, nor can it distinguish between middle-aged/young adults and the elderly. More Health’s approach lies in multi-dimensional, customized behavioral health interventions. These primarily target four areas—exercise, diet, sleep, and stress management—supplemented by multi-dimensional features such as data monitoring and medication management to track customers’ health behavior data. By comprehensively evaluating customers’ daily health habits, More Health uses its proprietary “M-Value” to adjust premiums or increase coverage limits and determine daily health rewards. This multi-dimensional lifestyle intervention provides a more objective assessment of users’ health status and levels.

In addition, Miao Health has assembled an expert team specializing in artificial intelligence (AI) and medicine to support the development of AI algorithms underlying its health services and to provide medical services. This team, comprising approximately 40 members, includes big data experts, exercise and wellness physicians, and nutrition specialists. In April 2018, Miao Health established a joint venture with the Canadian Wellness Institute (CWI). The professional health management team provided by CWI will deliver a comprehensive service system to serve as the operational backbone for Miao Health’s offerings.

In the view of the two interviewees, the development of interactive insurance has benefited from a shift in awareness regarding insurance products and the operational pressures faced by insurance companies. Currently, traditional health insurance is grappling with product homogenization, ranging from coverage scope to claim amounts, necessitating transformation amidst these challenges. “Customers are increasingly selecting insurance based on specific products and services; therefore, enhancing the value of the industry chain is key to this transformation,” said Qi Zhen.

“The current challenge in health management is the lack of a ‘landing point’; management is not equivalent to education.” As Hengkang Insurance’s Vitality program drives transformation within the insurance industry, more insurers are moving toward interactive policy scenarios. Health insurance is undergoing change, and interactive insurance products are becoming a “landing point” for user groups’ health management, helping them carry out targeted and effective personal health management.

From the user’s perspective, purchasing insurance is not merely about acquiring coverage; the benefits are evident, namely, the improvement of health. By integrating health management capabilities, health insurance not only transforms traditional insurance marketing and customer experience but also facilitates the effective delivery of genuine health management services to users, thereby identifying an appropriate “landing point” for such services.