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Analysis

Insurance Reformulations Before and After COVID-19

By Miriam Bello | Thu, 07/02/2020 - 14:32

According to an interview with Paulino Decanini, Executive President of SiSNova, insurance penetration in Mexico is below seven percent due to the lack of flexibility of the current product offering. He explains that much of this is because of the incorrect approach companies have toward the Mexican market. “We believe there are serious problems with the business model of many insurers, which offer complex products that do not properly address the underlying morbidity of the insured population,” says Decanini.

This opinion is shared by many in the industry, with a common call to reformulate the sector and offer health insurance policies that are more adaptable, unlike the two current traditional and most common options: major medical expenses and healthcare services coverage.

Insurance companies, such as Prevem Seguros, have told MBN that in the Mexican market there is a great deal of creativity, however. “Life insurance has effectively grown through the creation of various innovative products,” said Pedro Pacheco, Director General of Prevem Seguros. Pacheco further explained that the company tried to offer different packages and products that are adapted to people of different socioeconomic statuses. For lower economic ranges, health insurance costs weigh heavily on the budget of a family, which encouraged the sector to innovate and be creative on policies, as well as to “use technology tools to anticipate costs of health interventions and to provide a guarantee of payment,” says Pacheco.

Alejandro Sancen, Director General of MASZ, told MBN that “the problem is that private insurance only focuses on accidents and major medical expenses but not on pre-existing conditions, which is one of the main reasons to have an insurance. Meanwhile, the private insurance sector does not have the policies to cover the low-income segment of the population because there would not be enough budget to bear this cost burden.” When asking him about a solution or a better way to offer private healthcare coverage to the population, Sancen commented that MASZ is constantly working on developing new coverage products to address the common needs of the population under a personalized coverage perspective. “We are breaking the mold in coverage services for cancer and diabetes, basing our products on preventive healthcare. We have also developed coverage products for infarction, cancer and diabetes, something that was unthinkable in the market.” He also explained that the demographic changes of the population are key to address healthcare matters and therefore offer best solutions. He puts the millennial generation as an example. “They are having less pregnancy growth. Yet, many insurance companies with structured policies continue to offer benefits that are no longer useful for clients,” says Sancen.

The trend of personalized policies is supported by technology and digital offerings, according to Eduardo Lara, Head of Health in Latin America at RGA. “The digital revolution has impacted the healthcare industry greatly, as well as insurance companies. In particular, health insurance companies are suffering a double impact. On the one hand, you have genomics, personalized healthcare and smart medicine, among other technological advances for patient treatment. On the other hand, insurance companies have expanded their distribution channels and are adopting blockchain technologies and smart coverage, to make the client’s journey as smooth as possible,” he says. Lara explained that technology and personalized medicine and policies can be a watershed for the insurance sector and companies are realizing that.

In fact, the sector has many startups with ambitious projects that include telemedicine options, personalized recommendations and that integrate life insurance coverage. One example is Kalmy, a digital insurance broker that created a personalized approached through an app and works with insurers to offer a better policy for the person.

COVID-19 has brought many new changes, as well. “The mortality rate for a COVID-19 patient is around 11 percent. Meanwhile, 6 percent of all patients have an insurance policy. I do think this scenario will impact the number of insured people as this is something that can happen to anyone,” told Omar Viveros, Director of Health Benefits at Willis Towers Watson to MBN. While the sector is expected to grow out of the pandemic, he does recommend that “technology and digital tools exploit the benefits of each policy.” While personalization is expected, sustainability is required, which is why this sector will still have to wait to see the real impact of COVID-19 to build a strategy to achieve personalized coverages with sustainable certainty for insurers.

Miriam Bello Miriam Bello Journalist and Industry Analyst