01 Feb Market Disruption… Far Away But Close
It seems every day we read about technological changes being made to automobiles which will dramatically change the way we drive and use them. These same changes will also dramatically impact the way cars are insured and this has the potential to turn the auto insurance market upside down. What has been a stable and predictable market for at least 75 years will begin to change in ways never experienced before. This is what is called “disruption” and it spills over to many tangential areas of the markets it impacts including the internet market for auto insurance. For example, who need’s insuring if “no one” is driving the car?
This same disruption is occurring in health insurance. The recent announcement by Amazon, Berkshire Hathaway and Morgan Chase to form their own independent healthcare entity along with the still in progress merger of CVS drug stores and Aetna insurance are only the very beginning. Several “big” shifts are all moving forward simultaneously. First, this year it’s anticipated that more people covered by Medicare will receive medical care than all those under 65. And the shift continues to move toward Medicare. Since Medicare pays significantly less than private insurers for most medical services, this puts serious financial pressure on the non-Medicare market as more health costs are shifted over to them.
Secondly, this increasingly high cost impacts affordability/accessibility to coverage which increases pressure for single payer. There are several scenarios this can take but all would severely impact the size of the current healthcare market and the leads/calls generated for it. This leads to the third disrupter – technology. Apple, Google and a host of other tech innovators are developing apps and devices that can connect us real time to medical monitoring without the need for a private doctor and especially hospital visits until an acute situation develops. For example, soon EKG’s and other similar tests that could previously be done only thru a doctor’s office or hospital visit can be routinely sent for monitoring from your smartphone.
Other markets with similar developments in the making include home mortgage and refinancing, homeowner’s insurance and personal debt.
This reinforces the idea that much of what we experience and work with is all interconnected. Change is going to continue to evolve and as a consequence, disrupt much that is familiar. Our job is to stay alert of what’s happening and adapt in time to “ride” the change versus being covered up by the “wave”.