Living better in all stages of life

Probably now more than ever, people are seeing, in unprecedented terms, how health so easily impacted by external factors. Concerns about having a healthy lifestyle has increased in recent decades around the world, while life expectancy has increased. The country with the highest longevity indexes is Japan, with 84.26 years, and among the top twenty-eight countries, 22 of them are European, 5 are Asian (Western Pacific) and only one is North American, which is Canada. The average life expectancy at birth is 73 year old.

From our perspective, as we have already touched on in the previous edition of Insurtech Outlook (2020), we can see a clear convergence between the areas of Life and Health. That is to say, people, worry more and more about having a healthy lifestyle from a very young age, and also about the possible contingencies that may occur and also about their impact on the quality of life of their relatives and that of themselves.

This trend can be seen in different territories, both in the United States, as in Europe or Asia. It is precisely in the latter region where one of the giants of the insurance industry has emerged, starting from a specific sector (the insurer), it has become a true global giant, crossing the traditional borders of the sectors and also the technological barrier. We are talking about Ping An, which extends its offer of services from insurance to the health field, but also entering banking and education. Perhaps this is one of the best examples of insurance companies dominating one or more ecosystems, understanding that the key is to build a customer base (in 2020 alone, their services were used by more than 575 million people) which regularly access a wide portfolio of services. In fact, if we look at the ranking of insurance companies by market capitalization in the main insurance companies, prepared by Statista, Ping An is in second place, only behind Berkshire Hathaway (U.S.).

This ecosystem is also one of those that receives the most interest from technological giants. In recent years alone it has received large investments from these organizations or from their investment vehicles or subsidiary companies, as we saw in the previous edition of this report, and as we also explained this year through the main operations and actions carried out by TechGiants.

With regard to Life insurance, it must be taken into account that, according to the "World insurance: riding out the 2020 pandemic storm" report carried out by Sigma, the Research area of ​​Swiss Re, the life sector will be more affected by the experience of COVID-19 than that of non-life.

And what are TechGiants doing?

Google

Google has just launched the Google Health Studies application to address a study focused on respiratory diseases. Users who download the app (currently only for Android) can participate in health studies, simply by answering several surveys in which they provide certain valuable data. Thus, researchers will be able to reach a large population and better understand in less time specific aspects related to people's health.

One of the key issues for this launch is the treatment of information in a safe and responsible way (encrypted and stored securely), in which participants maintain control of their data.

Alongside this, Google has also made a series of self-assessment tests related to various mental illnesses available to users, as it became aware that many people were looking for this type of solution on the Internet. This way, people who wish to, can use these types of forms (which are commonly used by medical professionals) to obtain a first response in cases of depression, anxiety, post-traumatic stress disorder or postpartum depression.

Another of Google's advances in the field of health has been that of its Brain initiative for topics related to the care of people and medicine. Specifically, Google's AI research center, one of the most prestigious in the world, is working to use so-called vision systems (for example, the one currently used to recognize cars) to identify diseases or medical images. In fact, Google believes that this technology is perfectly applicable in the modern day and is using it for research in the areas of ophthalmology (diagnosis of ocular diabetes), digital pathology (for example, helping doctors to detect cancer in patients) and genomics.

A different field of application in this technology is that of speech recognition, to recognize conversations between doctors and patients to identify the most important parts of the consultation and thus help doctors to optimize the process of taking notes and documentation. This would enable them to focus on other tasks related to their medical knowledge and practice.

Google also announced the launch of the Google Cloud Healthcare API in April 2020, a solution designed to allow the exchange of standardized data between different applications and healthcare solutions created with Google Cloud technology.

In terms of investments, Google's parent company, Alphabet, once more invested in the Oscar Health insurtech, which received an investment of $ 225 million (series C) in which different companies participated. This investment follows previous investments, including one made in 2018 for 375 million dollars, which was this time lead by Alphabet.

It also participated in another of the large investments made in the health field in 2020. At the end of December, it participated in a round of 700 million dollars in the company Verily, its subsidiary company dedicated to the study of life sciences.

Google also completed the acquisition of Fitbit in November 2019, for 2.1 billion dollars, with the aim of creating its own smartwatch division and competing with its rival, Apple. This acquisition, which had generated some controversy for legal reasons related to competition in the European Union, was finally approved by the European Commission in December 2020. In this same field, a month earlier, in November 2020, the reinsurer SCOR and Garmin signed an agreement to expand the former's health and wellness platform, which feeds in data from Garmin Wearable devices and is complemented by SCOR's biological age model (the so-called BAM).

Amazon

In this same market, at the end of 2020, we saw the launch in the United States of the Amazon smart bracelet, the Halo Band. This device, which does not have a screen, communicates with its native application and is capable of detecting the percentage of body fat of a person (after performing a 3D scan of the human figure) or of identifying the user's mood (thanks to two microphones built into the bracelet). This bracelet has already been integrated into the Vitality program of the American insurer John Hancock and the Canadian ManuLife, to help track the activity of patients and so, with the data collected, are able to obtain benefits in their life insurance (discounts on policies, points...).

Amazon has also launched Amazon Pharmacy in the United States, a fully digital pharmacy with which customers can directly order prescribed drugs through this multinational technology company.

Clients have to sign up and share basic information related to the type of medications they take and possible allergies or health problems they may have. Users then have two methods of ordering the drugs: they can submit their prescription to Amazon, or they can have Amazon request the prescription on behalf of the patient (with prior authorization) and then ship the drugs to the patient. In addition, users can pay through their health insurance or with other payment methods. In the case of choosing to pay through ones health insurance, Amazon shows the price of the drug with a copayment.

In addition, and to provide a customer experience similar to that of Amazon's own service, customers with the Prime subscription will be able to receive their medications without shipping costs. These customers who choose to pay without insurance can get discounts of up to 80% on generic drugs and up to 40% on brand name drugs, whether distributed by Amazon or one of more than 50,000 partner pharmacies. Furthermore, customers have the option of viewing their drug list, order history and prescription details in the Amazon application itself. In terms of quality of service, Amazon also ensures that its team reviews prescriptions for potential problems that may occur during the medication process.

Likewise, they also incorporate a 24x7 customer service system to answer any user questions. This launch signifies Amazon's direct competition with the large pharmacy-owning chains in the United States, and also with other players such as some shopping centers, which also began to distribute drugs from their facilities.

Amazon bought the PillPack company in June 2018 for a total of 750 million dollars with a clear intention to dominate one more part of the Health value chain. The reason being, in the case of the United States, that the annual expenditure on prescription drugs is around 500 billion dollars. A market in which there is also a large percentage of people who have some type of chronic disease.

The distribution company, which announced the end of its alliance with JPMorgan Chase and Berkshire Hataway in the Haven joint venture (after 3 years together), launched its own healthcare company (in the primary care field), Amazon Care. This company however, only serves company employees in the Washington area and offers services such as the possibility of sending chat messages to doctors, medical consultations (telemedicine), drug delivery and also a house call from a nurse when necessary. All of these measures are aimed at reducing the number of face-to-face visits to medical centers. This initiative arose internally within the framework of Amazon's Grand Challenge program, even before Haven was launched.

Amazon plans to take further steps in this area and grow this service and extend it to the general public, in a country where there is an annual expenditure of almost 4 trillion dollars, of which about 20% (roughly 800 million dollars) is wasted due to factors such as a prescription occasionally priced higher than necessary, medical errors or loss of diagnoses.

And last but not least, Amazon announced in late 2020 the launch of a new tool to help healthcare organizations standardize data to make it easier to find and analyze data. Amazon HealthLake is a service designed for organizations in the field of Health and Life Sciences that is capable of aggregating the decentralized data of a company or organization and centralizing it in a data lake in Amazon Web Services (AWS), standardizing them accordingly by automatically using machine learning techniques.

Organizations will be able to make much more accurate predictions about the progression of patients' diseases, improve the efficiency of clinical trials, and increase the accuracy of insurance premiums.

Amazon HealthLake works as follows: it identifies each piece of previously isolated clinical information and proceeds to label it. The system then indexes the events on a timeline with standardized tags to allow easier searching. The data is then formatted with the common standard protocols in this industry, the Fast Healthcare Interoperability Resources (FHIR), which will facilitate the possibility for companies to create their own analysis and machine learning applications to relate the different isolated data, discover trends and make even more accurate predictions.

Thanks to the analysis that can be carried out with this system, based on machine learning techniques, it will be possible to improve customer service and analyze the health trends of the population as a whole. Amazon's solution will also reduce the costs associated with manual data entry by healthcare professionals. In fact, companies and organizations will be able to copy health data from systems such as electronic medical records (EHR) in a simple, agile and fast way. In addition, the data stored in this solution will be shareable with other health systems and with third-party applications, which will represent an advance in collaboration between different entities. It will also be a benefit for clients, who will see how their information, stored safely, may be shared, with their prior authorization, with other medical institutions.

Apple

Apple launched a digital fitness subscription service in the United States in late 2020. In this case, the Californian company focused on offering a series of training content through its own channels and devices (iPhone, iPad and Apple TV). In addition, Apple integrates data and metrics from the Apple Watch device into this service.

The monthly subscription amount is almost $10 and it plans to add new classes every week. This new service must be analyzed in a context where people have reduced their gym attendance, many preferring to practice sports at home.

Apple also developed, in conjunction with the insurer Aetna, the Attain by Aetna application, a service that offers its customers a health experience that combines their medical history with the activity recorded on the Apple Watch to offer personalized goals and rewards to each user. In this case however, the data is not intended to be used for decisions related to the subscription, but the value of the premium or the coverage offered.

In the field of insurance companies, there have been different movements that cause changes in the Healthy Living ecosystem. Specifically, Cigna, the American insurer, has partnered with Oscar Health to commercialize new health plans in the United States and has also entered into an agreement with Prime Therapeutics, a drug distributor with which great alliances are beginning to be formed that understand the healthcare as an end-to-end service.

Along the same lines, the case of CVS, the significant American pharmacy network, which acquired the health insurer Aetna for $ 68 billion in 2018 and is adding more health services to its stores, could be framed.

Baidu

On the Asian side of things, Baidu plans to launch an investment of 2 billion dollars to innovate the field of disease diagnosis and in the discovery of new drugs, thanks to Artificial Intelligence techniques. The search for this investment would be led by the Chinese giant, even so, it would seek to include more partners to create an independent company. In recent months, Baidu has invested in several companies related to the field of Health and Life Sciences, such as Polaris Biology or T RootPath; and also with more technological companies in the field of Artificial Intelligence, such as Atomwise and Insilico.

In relation to COVID-19, Baidu, in conjunction with Oregon State University and the University of Rochester in New York, published its Linearfold prediction algorithm (LinearFold) in February 2020. This publication helps researchers better know how viruses spread in a more efficient and quick way, being able to significantly reduce calculation times. In the case of COVID-19, for example, the prediction of its ribonucleic acid (RNA) structure could have been reduced from the 55 minutes it took before using this algorithm to 27 seconds after its use.

Furthermore, in March 2020, Baidu launched the Yinchuan Baidu Health Internet Hospital, in northwest China, with an initial capital of 1.4 million dollars. This hospital will focus on health management, conducting medical check-ups, health consulting services and medical consulting, among other things. In addition, the Chinese company also launched the subsidiary company Baidu Health Technology in the same month.

All of these steps are in line with a health-related activity that the company began in 2015, when Baidu began offering users the ability to contact local doctors, request appointments and ask questions online. Another of the Asian giants, Tencent, signed a strategic agreement in early 2019 with Merck, the German multinational manufacturer of pharmaceuticals, chemicals and biotechnology, to explore new possibilities in the field of health care through digital platforms in China.

The objective of the agreement is to improve the lives of 40 million patients in that country by 2025. Through the use of technology, mainly Artificial Intelligence and Big Data, the two companies intend to improve knowledge of various diseases (from chronic diseases to allergies, infertility problems, diabetes, cardiovascular diseases and even cancer) and explore the production of more effective drugs.

The agreement also focuses on the provision of smarter medical services for patients, which is aimed at better controlling chronic diseases. Tencent also launched a platform aimed at drug discovery through the use of Artificial Intelligence in July 2020, iDrug, with the aim of reducing the time spent on research and development (R&D) of new drugs.

The Shenzen-based company also participated in one of the biggest investments in China, which was received by the DXY Company, worth 500 million dollars. DXY is a Chinese health portal that offers services that include information exchange and data collection and management. In addition, it connects patients, hospitals, doctors, researchers and scientists, pharmacies and insurance companies. Although the company emerged as a knowledge-sharing platform for physicians, over time, it has been adding patient-oriented services.

Alibaba

Ali Health, Alibaba's health division, reported in late 2020 that it had made a profit for the first time since it was established in 2014, at a time when it had a total of 250 million active users, the highest figure of all online healthcare platforms in China.

In fact, one of the strengths of this giant is that it has millions of users loyal to the Alibaba ecosystem, who are used to using this company's platforms to carry out different procedures or purchases.

Thus, Ali Health customers can access a series of local clinics, which offer, among other services, the renewal of prescription drugs and their subsequent acquisition through their cloud-based pharmacy through Taobao, Tmall and Alipay. According to the data provided, in the second and third quarters of 2020, profits reached 42.4 million dollars, an increase of close to 300% compared to the same period of the previous year. In these six months, the gross value of pharmaceutical products in its online store, Tmall (owned by Alibaba), exceeded 8.4 billion dollars. At the end of September, the number of active users reached more than 250 million, the highest among China's online healthcare platforms.

Furthermore, in August 2020, the Chinese group received an investment of 1.3 billion dollars (in a secondary sale of shares) to dedicate it to the development of its online pharmacy business. This operation is the largest in terms of follow-on share sales since 2015 and also represents the largest deal in history in the field of health care. Another player in the Chinese ecosystem, JD Health, a subsidiary company of the e-commerce giant, JD.com also launched its service in 2020, which specializes in the provision of services such as medical consultations and the online sale of drugs.

This company predicted in its IPO prospect that the sector will grow at a compound annual rate of 39% in the period between 2009 and 2024. This company had a sales increase of 76% in the first six months of 2020, somewhat higher than the rebound of Ali Health, which was 74% between the months of March and September 2020.

Rakuten

Rakuten, for its part, has a biotechnology company, Rakuten Medical, which develops precision research therapies and cell targeting through its Iluminox technology platform, which, in preclinical studies (not yet approved by medical regulatory authorities), has shown that it can induce or help increase rapid and selective cell death and tumor necrosis.

In August 2020 Rakuten also acquired the Swiss company Medlight, which produces and markets a wide range of catheters and diffusers for the supply of optical light.

Insurtechs in the Healthy Living Ecosystem

Of the 793 insurtechs in our sample, 221 correspond to the Healthy Living ecosystem; and of these, only 68 received investment in 2020. This investment amounted to almost 2 billion dollars, and it was the ecosystem that received the most funds in the past year (32% of the total).

The majority of companies that received most funding are predominantly based in the United States, China and Europe. In fact, among the companies that received more than 20 million dollars of investment in 2020 (a total of 15 companies), 11 are American, 2 Chinese and 2 European (UK and France).

This trend once again shows that countries with very different health realities are the ones with the greatest needs when it comes to contracting health insurance and it is, therefore, where more insurtechs emerge, responding to these needs. In the American case, moreover, if we look at the investment received, it amounted to 1,276 million dollars, followed by China (405 million representing 20%) and Europe (17% and 114 million).

In order of investment in 2020 in this ecosystem, the companies with the most funds were the American Bright Health (with 500 million); the Chinese company Waterdrop (380) and the American insurtech Oscar Health (365). These three organizations raised a total of $1.245 million, which represents 63% of all the investment made in insurtechs of the Healthy Living ecosystem.

But the most remarkable fact without a doubt is that this sum is higher than that collected by any of the other ecosystems. For example, Business Shield, which was the second ecosystem by investment with 1228 million, did not exceed the figure achieved by the three mentioned companies.

Healthcare needs in these geographies are different, but it exemplifies very clearly the leadership of the sector in the United States, where the private healthcare model and its characteristics require constant innovation (and the insurtechs reflect this search for innovation perfectly); but also the traction gained by the new models of digital health in Asia, especially in China, where the volume of the population of many countries, together with the growing improvement in people's quality of life and their increase in purchasing power, are causing health and life insurance to rise. Furthermore, in markets where the insurance penetration rate is still very low, below 3% in some cases, it shows that the growth possibilities are vastly greater in these territories.

It should also be added that, in many Asian countries, daily access to certain platforms and applications is much higher than on other continents. It is precisely on these platforms belonging to some TechGiants (which would be ecosystems themselves) where users can contract insurance in a more natural and integrated way in their day-to-day life. For example, when they take out travel insurance with medical coverage on these platforms at the same time as they book the trip; in contrast to more classic models where travel insurance is contracted directly with the broker or on the website of the airline or travel agency.

Finally, in Europe a reduction in investments in the area of ​​Healthy Living is clearly seen, specifically by more than 50%, as in 2019 an investment of 302 million dollars was achieved; and this year, however, only 146 million has been achieved. The case of Alan stands out, which in 2019 was the third largest investment with 45 million and in 2020 this figure increased and exceeded 54 million, which in two years has become one of the startups with the greatest traction in Europe, managing to attain almost 100 million dollars.

Bright Health operates in the USA offering both individual and family plans and Medicare.

Last Round: $500M in 2020

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Waterdrop is a Chinese platform that connects insurers with potential customers and allows people to start crowdfunding campaigns to help patients in need of financial support in health care expenses.

Last Rounds: $380M in 2020

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Oscar is a health insurance company that offers individual and family plans, medicare advantage, and small group products.

Last Rounds: $365M in 2020

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