The rise of price comparison websites is providing a rich range of benefits for South African medical schemes and their members.
Price comparison websites, or aggregators, continue to disrupt the insurance industry. According to a recent McKinsey & Company study, “working with such aggregators can be a preferable option to insurers that are wary of investing in the purely direct space”. Medical insurers have known this for years and continue to enjoy the benefits of partnering with aggregator sites.
There are four key reasons why – and those reasons have everything to do with the unique nature of the digital comparison platform.
1. Younger, healthier audience
“With aggregators, our audience is younger and healthier, and that user profile is important to the long-term sustainability of any medical scheme,” says Alexia Graham, director at Hippo Advisory Services. “Medical schemes need to constantly attract those younger, healthier lives because if they don’t, their risk base will age by a year every year.”
As people get older, their medical expenses tend to increase, and they tend to claim more from their medical schemes. That, in turn, puts pressure on the medical scheme’s reserves, which ultimately impacts members’ monthly premiums.
2. Efficient integration
“The second reason medical schemes love aggregator sites is because of their efficient integration process,” Graham says.
This is how it works: the consumer will compare and choose the best medical scheme for their unique needs. The application is then completed over the telephone, with no onerous paperwork. “Instead of completing dozens of pages manually and sending those to the medical scheme with copies of your ID and your children’s birth certificates, the aggregator’s agent will complete the application over the phone, then send it to the medical scheme, where the medical scheme’s software will either accept it automatically or with underwriting conditions,” Graham says. “It’s a very efficient new business process for the medical scheme, and it’s a lot more convenient for the user.”
3. User insights
Third, comparison platforms can assist medical schemes with valuable user behaviour information. “Medical schemes often come to us when they’re changing their products for the new year,” says Graham. “They’ll ask for input on their product design, based on depersonalised demographic information that we have about our customers.”
Comparison platforms also have access to user preferences, which are very useful in shaping the medical scheme’s product development. “We can give them an indication of the type of medical aid options that our users tend to select,” Graham says.
“Is it a hospital plan, or is it a hospital plan with a bit of out-of-hospital cover, or are they going for the top-end plans? At what point in the product selection process are we losing them? We can share insights around that user journey.”
4. Standardised comparisons
It’s not just medical schemes that benefit from the ease of use that aggregator sites provide. Consumers also enjoy better – and simpler – decisions through side-by-side comparisons.
“Medical insurance is complicated,” says Graham, “and if you had to sit with brochures from each South African medical scheme, you’d find that there is no standardised industry terminology. Each medical scheme also has its own rates, and unless you get into the details, you wouldn’t know that.”
To that end, many insurance sites have developed standardised terminology which makes the user’s decision-making process easier.
“We’ve implemented a ranking system for the richness of the benefit components within each product, and our comparison platform calls attention to that,” says Graham.
“It’s important to simplify the jargon for consumers who are making decisions about their medical insurance. Online aggregators are perfectly positioned to offer that ease of use – both for medical schemes and for their clients.”
PERSONAL FINANCE