Despite some of these challenges, pharmaceutical companies have made strides over the last few years in carving a slightly different path. With that in mind, what can insurance companies learn from big pharma?
1. Complete propositions are better than products
Pharma companies have developed a set of complementary propositions that go ‘beyond’ or ‘around’ the pill, which can be anything from companion diagnostic capabilities to nursing support. Interestingly, not all of these add up to a compelling profit line – indeed, the regulator often dictates that these services should not turn a profit. In that sense, it’s remarkable how pharma companies have moved up and downstream in patient care to build brand engagement and patient trust without destroying commercial value. Insurance companies, on the other hand, have struggled to identify how to branch out from their core products whilst retaining a commercial edge - particularly when it comes to propositions that are not just up-sells or cross-sells of other protection products.
2. Becoming more personalised: The response to changing decision-makers
Historically, the people in charge of making choices on drug provision were doctors and physicians. Over time, this shifted towards the aggregated budget holder (e.g. NHS procurement). More recently, with the advent of freedom of information, and increased data availability, patients are more informed and are becoming increasingly vocal about what they believe is the right treatment for them. Coupled with the low cost of health information (e.g. genetics) and the increasing use of wearable technology, they are demanding more personalised care. As a result, many pharmaceutical companies now consider the patient the primary customer. This echoes the specialty insurance sector, where decades of debate have raged over whether the broker, the intermediary or the end client is the real customer, and how best to provide a product that meets their needs (off the shelf vs. bespoke).
3. Data proficiency and critically, data application, are keys to the cure (literally)
It is no secret that data is probably the hottest topic in insurance right now. Most insurance organisations are busy developing the groundwork for data prowess – data availability, data quality, a single source of truth and core data platforms. However, outside actuarial and pricing, there’s so far been relatively limited evidence of data decisioning across the insurance organisation. Pharma is similarly data-heavy - particularly given the reliance on clinical trials, reviews, and regulatory approval. Pharma also continues to make key decisions using data, despite deficiencies in the data landscape – it’s not unheard of for trial data to be paper-based, yet used for key life-saving decisions. This is because the focus is always on using data to drive outcomes, rather than obsessing about the ‘purity’ of the data itself ‘.
4. A strong ESG agenda has genuine payback
The difference between the two industries during the pandemic couldn’t have been more stark. When COVID-19 struck, pharma began vaccine trials almost immediately, with many stating that no profit will be made on any vaccines for a period of time. There was even pan-industry collaboration to try different types of vaccine, so that not all companies were trying to do the same thing at the same time. Contrast this with the insurance industry’s response to business interruption claims. The industry shot itself in the foot by trying to refuse claims, only to lose in court and gain yet more bad press. Industries that typically don’t enjoy hugely positive press coverage could not be in more contrasting positions in mid-2021. Pharma’s focus on a longer-term game, societal benefit and a wider economic strategy appears to have paid dividends.
So what practical steps can you take away from this?
1. Get under the skin of other industries
Particularly those that are less typical, but share similar characteristics - it goes without saying that we recommend pharma as a good place to start! And that doesn’t mean taking a cursory glance at whatever the latest news is, it means digging deep enough to gain a real insight into what makes the industry tick and what makes it thrive. It’s the only way to draw proper, concrete conclusions.
2. Phone a pharma friend
Generally speaking, insurance and pharma play on different fields, so the risk of losing your ‘secret sauce’ is minimal. Finding your equivalent in the pharma space and building a mutual relationship with them means you can share and learn about topics that are often on common ground. You’ll also be surprised at how interested other industries are in insurance!
3. Set up your own control group
Pharma is based on what works and what doesn’t. When it doesn’t work, they refocus and try again. Too much time in insurance is spent attempting to find the elusive silver bullet, and not enough time is spent testing things and figuring out what works in reality rather than on paper. Particularly with the advent of the FCA’s Pricing Review on the horizon, the impact of Brexit, and significant changes to Claims regulation, now is the time to think about how you can respond to a game no longer just predicated on price.
In summary, here at PEN we believe that key lessons can be learned from unusual industries. We work closely with our colleagues in Life Sciences to understand where there may be opportunities for insurance, and we are always happy to connect our clients to each other. Come and say hello or get in touch with Huw Barker directly.