Qumata, formerly known as Healthyhealth, is a digital underwriting insurtech. Its algorithms are designed to improve health insurance underwriting, customer journeys, and pricing tables for insurers.
However, although the UK is a mature market with an open-minded regulator, Asia has adopted a more conservative approach towards digital underwriting and new pricing models. Amidst such restrictive regulations, it is worth considering why Asia has become so reserved, and some of the other issues currently affecting startups such as Verisk, Inshealth, Human API, Leapstack, and Qumata.
Are steps really an indicator of mortality?
The founder of Qumata has said “we take data such as steps, and from this minimal information we are able to predict your morbidity and mortality risks.” While it’s true that associations between steps and all-risk health outcomes are important considerations when developing internal underwriting guidelines, the health benefits derived from the number of steps taken daily it is not based on science but instead originates from a marketing campaign for a pedometer in Japan called Manpo-kei, which translates to “10,000 steps meter” in Japanese.
Additionally, the optimal number of steps needed to reduce the risk of mortality is significantly influenced by age. In Asia, life insurance is primarily bought by young people, those <50 years old, who are unlikely to reap health benefits from step-counters alone. In fact, life and health insurers actively avoid those over 50 regardless of their activity levels.
Regulatory Environment In Asia
Currently, insurance regulators across Asia closely monitor and restrict the factors that can be included in pricing and underwriting models. The reasoning lies in the fact that many Asian markets are still considered to be early stage, which makes consumer vulnerable to mis-selling. There is also a wariness of the statistical relevance of data sources such as step counters, heart rate, and location data. As such, their use in pricing models is still forbidden.
Qumata states its steps based calculations “can be directly applied to an insurers existing pricing tables”. To date, not one Asian insurance regulator allows life & health insurers to make premium calculations based on steps and activity data. China in particular has a prohibitive set of rules in this regard.
It may be possible that Qumata and others are referring to providing a discount on renewal premiums (the annual amount paid to keep the policy alive). Nevertheless, this action only offers a discount at renewal; they don’t change the original premium paid by customers.
Recent regulatory actions have significantly restricted the use of customer data in China. For example, Didi (China’s Uber), Meituan (China’s Deliveroo), and Baidu have all had to limit their use of customer data and underwriting processes cannot be skipped by entering your bpm (beats per minute) or bmi (body mass index) data.
Perhaps Qumata has a plan for regulatory sandboxes in Malaysia or Korea, markets with more liberal regulators, but the core markets of Indonesia, Japan, and China remain.
Market Offerings
There is no doubt that Asia is a growth market in the global insurance industry. However, it is also a region of commodity offerings and markets saturated by local competitors. For example, a well known Chinese Life Insurer, Taikang Life, offers a premium discount at renewal if the policy holder can trot out 8000 steps a day. Again, the discount is more like a no-claims bonus than a deduction to reflect the customers lower risk profile for being more active. Indeed step counters and renewal discounts have become a commodity offering offered by Axa (Health Keeper), Manulife (Move), Ping An (Health), and Prudential (Pulse).
Final Thoughts
Life and health insurane in Asia is at an inflection pint. The era of mass market sales using banks and agents is being re-imagined with internet based propositions. However, regulatory restrictions imposed on pricing and sales methods during 2021 in the wake of the suspended Ant Financial IPO have prevented insurers for introducing new underwriting methods, and re-inforced the rigidity of pricing models based on age, medical history instead of new data forms such as steps and activity data.
