The Insurance Industry's Critical Role in Digital Technology Adoption

Shriram Ramanathan, Ph.D., Senior Analyst

Despite the hype around digital transformation, its adoption has been particularly slow in the physical industries. While there are several reasons for this slow adoption, misaligned incentives and an unwillingness to invest in technologies with unproven ROI are some of the more common reasons. For example, there is little incentive for a radiologist to sign-off on a competing technology like AI-enabled medical imaging, let alone the fact that the ROI of this technology is still not clear.

For some time now, we have argued that the insurance industry will play a critical role in enabling adoption of such technologies. Indeed, this has started to happen, as can be seen in the case of Ping An, one of the largest insurance companies in the world. Through its subsidiary Ping An Good Doctor, the company has already committed to building internet hospitals in partnership with 50 hospitals in China and has also unveiled an AI-powered unstaffed clinic that can diagnose, as well as dispense, more than 100 different types of medications. Recently, the company led a $15 million investment round in Riverain Technologies, a US-based developer of automated AI-based medical imaging software.

Ping An Good Doctor One-minute ClinicPing An Good Doctor One Minute Clinic | Source: Ping An Good Doctor

This trend is not just limited to healthcare. For example, several predictive maintenance companies have partnered with insurance companies to offer guaranteed ROI with regards to process efficiency, production output, and even reduced breakdown frequency. In fact, equipment insurance firm Hartford Steam Boilers (HSB) recently took the bold step of acquiring Relayr, an IoT middleware company, that pioneered the use of IoT for insurance compliance purposes. Clearly, insurance operators benefit from better risk management as well as lower operational costs. We predict that, once these digital technologies prove their worth, insurance companies will start offering incentives to subscribers (for example, lowered premiums for using AI enabled medical imaging in lieu of radiologists) to further encourage adoption of these technologies.

In the meantime, companies should explore the use of similar insurance business models to speed up adoption of digital technologies within their companies as well as among their customers. This could be a win-win for everyone.

 

 

 

FURTHER READING:

- Executive Summary: The Digital Transformation of Healthcare

- Blog: Digital Opportunities Boom as Healthcare Spends Additional $750 Billion

- News Commentary: Ping An Good Doctor unveils an AI-powered unstaffed clinic

- News Commentary: IoT platform company Relayr acquired by equipment insurance firm HSB for $300 million

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