Browsing through your Facebook pictures may be Cigna's step forward to start bridging the gap between itself and Bupa, Thailand's leading health insurer.
Cigna is the country's second-largest health insurer with a market share of 12%, after Bupa. In April, the company announced it aims to increase its policyholders to 600,000 this year from 400,000 last year.
Global health insurers have fared well in 2017. On average the stocks of the five largest public health insurers have climbed close to 500% since 2010. Cigna's stock has grown 400% in the past five years, and is up 55% this year despite Anthem's thwarted efforts to take over the company.
Last year, the company's premiums in Thailand grew 15% to 2.6 billion baht. "In regard to this year, what I can say is that we are growing aggressively in the double digits," said Julian Mengual, chief executive of Cigna Thailand. The health insurance industry in Thailand will grow in the 7-9% range this year, he said.
Part of the insurer's growth strategy centres around offering cheaper bespoke insurance products, following the practice of its parent company in the US. In the Asian market, there is already some level of specialisation in the motor market, but customised insurance is still rare in the healthcare sector, said Mr Mengual.
In a sense, offering tailored products is antithetical to the concept of insurance.
Traditionally, insurers pay for claims through the premiums of customers who make few or no claims. If companies offer bespoke products, customers whose primary risk is cancer, for example, will pick a cheaper programme that covers cancer, but do not cover ailments that they think they will not suffer from.
Made to measure plans
"Our plan is to offer consumers lower premiums by allowing them to select plans that fit their needs. For example, a plan that covers chronic diseases, such as office syndrome, instead of a more comprehensive plan," said Mr Mengual.
Offering cheaper specialised products will allow Cigna to tap broader swathes of the uninsured or underinsured population, for many of whom Cigna's 8,000-baht average annual health insurance price is out of reach.
"Comprehensive insurance may be too expensive for the general masses, we are looking for products that can fit every segment," said Napha Trirattanawongse, chief marketing officer of Cigna Thailand.
"For example, a product like office syndrome insurance may be attractive to younger office workers, many of whom would not otherwise think about health insurance until later in life," she said.
Pushing the margins
The problem with bespoke products is precisely that consumers would be paying premiums for an equal or slightly lower number of average claims, which has the potential to erode Cigna's margins and profitability.
Asked what the effect of tailored products on profit, Ms Trirattanawongse said there are many aspects of an insurer's profit equation, including the cost of medical services, and the cost of retaining and acquiring clients.
"If I am presenting you with something that is relevant to your needs, the likelihood of you buying it is higher. Moreover, if you feel good about the product, and see benefits you will stick with it longer," said Mr Mengual.
Data from insurance companies and third parties may be key to attracting broader segments of the population. Insurance, traditionally a technology laggard, is moving to cut costs and attract greater numbers of clients through cheaper digital channels, managing the cost of care, and improving risk management.
"Traditionally we team up [with other companies] to enrich our data and understand consumer preferences. Sometimes we use social media, sometimes we use other sources, including telecoms and tech companies," said Mr Mengual.
"The 20 pictures that you have on Facebook have a wealth of information. If you have pictures in 10 different countries, we can deduce that you are well-off economically. We can deduce your employment status. On the other hand, if your social media accounts have inconsistent information, you are much more likely to default on your loans," he said.
The use of third party data to calculate premiums, however, has been a much more contentious issue. After all, insurers may refuse to insure, or drastically increase, the price of insurance for people with pre-existing conditions.
While the information asymmetry between companies and policyholders is a problem as old as the industry, the advent big data has left individuals much more exposed, as they share information with third parties throughout the day -- information that they would not necessarily want their insurers to know.
Access to credit card histories, social media, and ultimately Internet of Things devices will provide a robust competitive advantage to insurers that can get their hands on it. But this open access policy is not without its detractors.
"Facebook recently moved to prevent its users' online activity being used by insurers in Britain," said Tanguy Catlin, senior partner at McKinsey.
Sometimes consumers may not even realise they are sharing data. In Thailand, for example, the company started to use voice analytics to predict optimal price points of consumers, according to Ms Trirattanawongse.
Data and disruption
Increasing access to consumer data is transpiring as Thailand's population ages and interest in preventative care heightens. Health insurers thrive on older citizens, with Cigna's policyholders averaging 40 years in age -- a number that is more than likely to climb.
"Currently, only the wealthy segment is concerned with preventive health," said Ms Trirattanawongse, but that may not be the case moving forward, as the population ages, and self-serving health technology like fitness trackers becomes more common.
"While we are not at the 'wearable' stage yet, a lot of consumers are starting to use their phones to track some health gauges."
Widespread technological adoption will be a driver of profit in the insurance industry, and not only on the risk management side. By steering consumers to digital channels for advice and acquisition, insurers can reduce a substantial chunk of their operating costs.
"While telemarketing is Cigna's largest channel, digital distribution is increasing by around 100% every year," said Mr Mengual.
Additionally, automation can reduce the cost of the claims process by as much as 30%, and help better identify fraudulent claims, said Mr Catlin.
However, even if consumers are willing to give insurers open access to their data, the impact of technological advances on the industry in long run is uncertain.
In the future, for example, consumers may pay lower premiums and more for risk-preventive devices and services. These devices may not be distributed through insurers, but from technology companies or medical providers instead.
Furthermore, technology and telecom companies that have a monopoly on information, not insurers.
In the not-so-distant future Google, Amazon or Facebook may enter the insurance industry, instead of sharing their information with insurers.
Data-rich technology companies have the capacity to "cherry-pick" low-risk consumers, which can put the insurer's business model at risk, said Mr Catlin. Indeed Amazon is already moving into the healthcare space, after it received authorisation to serve as a prescription benefits manager in the US.
In other markets, insurers have started bracing for changes through increased numbers of mergers and acquisitions. In the past two years, US-based Anthem and Aetna sought to strengthen their market position against medical providers by attempting to acquire Cigna and Humana, respectively (neither deal went through). Aetna recently tried to merge with CVS (a major pharmacy benefits provider), and United Health, the largest health insurer in the US market, which already owns doctor practices, and surgery centres.
The Thai insurance market may be ripe for disruption and reorganisation.
"There are a lot of insurance companies in Thailand. I would expect consolidation, particularly in sectors like automotive, where premium growth has been slow. Put it this way, Indonesia has 260 million people, and Thailand has 67 million, but there are as many insurance companies in Thailand as in Indonesia," said Mr Mengual.