Insurtech: Dai-Ichi Life - Social Innovation Award Winner

By Hubert Yoshida posted 11-08-2019 03:33

According to Investopedia, “Insurtech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. Insurtech is a combination of the words “insurance” and “technology,” inspired by the term fintech

Insurtech companies, like fintech companies, are typically startup companies that are being driven by venture capitalists in the belief that the insurance industry is ripe for innovation and disruption. Insurtechs explore technologies and new business models that large insurance firms have less incentive to exploit, due to legacy investments, complacent profitability, or lack of knowledge of new technologies such as cloud, AI, and mobile devices.

Dai-Ichi Life is the oldest and the third largest life Insurance company in Japan. Few analysts would consider them to be an insurtech. While most insurtechs are looking to create more efficiency and agility to increase the bottom line for their investors, Dai-Ichi Life is not only focused on changing the Life Insurance business but also on powering good.  Based on a collaborative research with Hitachi that utilizes medical big data, the company is incorporating innovation in its life insurance business that provides " peace of mind " and " extensive health support" throughout the customer's lifetime. 

For life insurance policies, firms normally determine whether or not to offer coverage based on the health of applicants. But the risks of hospitalization or loss of life may differ among two applicants with the same health conditions depending on how their medical conditions and lifestyle habits change. Dai-Ichi Life’s goal is to resolve insurance business issues through digital innovations employing medical big data. To do this they drew on a joint research with Hitachi to develop a quantitative assessment model that predicts likelihoods of hospitalization and lengths of stays owing to adult lifestyle diseases. This model was the fruit of three elements. Medical big data on around 10 million Dai-Ichi Life policyholders, medical knowledge from insurance underwriting, and the analysis know-how from Hitachi’s medical expense prediction technology. This technology is a disease progression model that uses artificial intelligence to predict incidence rates of lifestyle diseases and total medical expenses. The results enabled Dai-Ichi Life to revise its insurance underwriting criteria so customers who would have previously been excluded from being insured could be insured based on their individual condition and lifestyle changes.  For instance, with the right medication, a person with high blood pressure may have the same underwriting risks as a normal person. 

Using the data based on individual considerations and big data modeling, the company anticipates adding around 2,000 new policyholders in a year. While this does not sound earth shaking by Investment standards, their long term goal is to expand potential of life insurance business through innovation to become a life-time partner for its clients, contributing to their quality of life and healthy life expectancies. Dai-Ichi Life therefore plans to review the coverage scope, develop services to prevent the prevalence and severity of diseases, and improve health by assessing changes in health conditions over time instead of assessing people just at the time of applications. Adult lifestyle diseases like high blood pressure and diabetes constitute the highest prevalence and risk groups in Japan. Since these illnesses can lead to life-threatening strokes or heart attacks, sufferers are more anxious than those who do not have those symptoms. Dai-Ichi Life’s services will not only enable more people to be insured, but also increase peace of mind for their customers who are insured.

For Hitachi, the partnership with Dai-Ichi Life has increased our learnings about the complex analysis of medical data from medical institutions, health insurance companies and other organizations which could enable the earlier detection of various diseases and improve the quality of preventive medicine, enhanced nursing care, maintaining health, reducing the costs of healthcare and increasing the quality of life for an aging population.

Dai-Ichi Life was this year’s 2019 NEXT Social Innovation Award winner