Outpatient Insurance Survey: Under the Shadow of "Wool", How Can Insurance Companies Stabilize the Balance Beam?

"15 yuan to buy Erjia mask" and "17.6 yuan to buy Hailu eye drops"...... While most consumers buy these products at a normal price of nearly $100, the policyholder of outpatient insurance buys them at such a low price.

In order to improve the consumer experience, many insurance companies have launched outpatient insurance products, and the biggest selling point is the "direct claim service": consumers can directly pay the reimbursed expenses after online consultation at the cooperative Internet pharmacy to purchase the drug without the need for review by the insurance company.

A reporter from the China Securities Journal learned from the investigation that some consumers used the direct compensation service to buy drugs by fabricating reasons, and even "purchased" drugs for others and charged service fees, which was suspected of insurance fraud and unjust enrichment.

To a large extent, outpatient insurance makes up for the shortcomings of traditional commercial health insurance, and has outstanding innovative significance and inclusive value, but most insurance companies use outpatient insurance as a "drainage" tool, coupled with the lack of industry experience, some companies have a "loss breakdown" situation. The soaring loss ratio may lead to an increase in premiums for other policyholders or an adjustment of insurance products, thereby harming the interests of other policyholders and ultimately disrupting the overall order of the insurance market.

How to weigh the convenience of claims settlement and the difficulties of the "wool party" to form a sustainable business model for outpatient insurance?

Hollowing out the mind to "gather wool"

Outpatient insurance is a type of short-term health insurance, which is currently launched by Zhongan Insurance, Cathay Pacific Property Insurance, Sunshine Property Insurance, Taikang Online and other companies, and is sold through agency channels such as Ant Insurance and Tencent Microinsurance. Among them, Ant Insurance is one of the most favored agency channels for insurance companies by virtue of the huge traffic of the Alipay platform, and the "Good Medical Insurance and Outpatient Insurance" launched in cooperation with many insurance companies is favored by consumers.

Outpatient insurance usually has important labels such as "zero deductible", "low deductible", "direct deductible", and "online consultation and drug purchase". According to the insurance contract of a 27-year-old female Zhongan Insurance "Good Medical Insurance and Outpatient Insurance" obtained by the reporter, the annual premium of the product is 288 yuan (the premium varies among different age groups), and the insurance liability includes general outpatient and emergency medical insurance (10,000 yuan), outpatient and emergency medical insurance for specific circumstances (10,000 yuan), and medical insurance for Internet drug costs (20,000 yuan).

Direct claim service is a significant advantage of many outpatient insurance products, that is, through the online consultation of the Internet hospital cooperated by the insurance company, the drug purchase can be paid directly without the review of the insurance company, and the drug reimbursement ratio is usually more than 50%, up to 80%. Taking the above-mentioned Zhongan Insurance's "Good Medical Insurance and Outpatient Insurance" as an example, consumers' daily Internet drug costs are not only "0 deductible", but also can be compensated according to the 80% payment ratio, and the maximum compensation for Internet drug expenses in a single day is 800 yuan.

However, some groups see an opportunity to "exploit loopholes".

A screenshot shown to the reporter by an outpatient insurance consumer shows that he chooses the reason of "high temperature sunburn" on the "direct compensation" page, that is, he can buy a box of Fuerjia mask with the original price of 75 yuan at a price of 15 yuan, and if he selects the reason of "sports injury", he can automatically issue an electronic prescription, and finally buy Qizheng painkiller ointment with the original price of 90 yuan at 18 yuan.

What's more, they even made a profit from outpatient insurance. "For every 20 yuan of medicine I buy, I have to charge 10 yuan for a service fee. You can take a look at bruising medicines, such as patches, which I bought myself and kept at home. There are a lot of people who have consulted me. Lili is a consumer of Zhongan Insurance's outpatient insurance, she said that she can provide purchasing services for others on the second-hand trading platform, and there are not a few "purchasing agents" like her on the whole network, and some buyers have a single service fee of more than 50 yuan.

There are also consumers who "stock up on drugs" through outpatient insurance direct compensation services, and then sell drugs at high prices on online platforms. On some social platforms, the information of "selling medicine", "receiving medicine" and "receiving masks" is easy to obtain.

These consumers are taking advantage, but the outpatient insurance business of some insurance companies is in a situation of "losing money and making money". Ding Liang (pseudonym), who has many years of experience in the insurance industry, told reporters that in the case of consumers taking the initiative to buy, the loss rate of outpatient insurance may far exceed 100%, and some consumers are rushing to "get wool".

"The threshold for outpatient insurance is relatively low, and the adverse selection situation is indeed more serious. At present, the profitability of our company's outpatient insurance has not met expectations, so it has not been promoted as a key product. An insurance company source said.

Suspected of insurance fraud

At present, there is a lack of public data on outpatient insurance. The reporter learned from the people involved in the product design of "good medical insurance and outpatient insurance" that the current scale of outpatient insurance in the whole market may reach 2 billion yuan. According to the data disclosed by Zhongan Insurance, the total premium of outpatient insurance in 2023 will be 330 million yuan, a year-on-year increase of 157.3%. Among them, the premium scale in the first half of 2023 will be 100 million yuan, a year-on-year increase of 52.8%. Despite the small size of the market, the issue of the "Wool Party" being suspected of insurance fraud cannot be ignored.

Yang Fan, general manager of Beijing Paipaiwang Insurance Agency Co., Ltd., analyzed to a reporter from China Securities Journal that on the one hand, some consumers use the direct compensation service of outpatient insurance to buy drugs at low prices out of the mentality of being greedy for cheapness; on the other hand, there are some loopholes in the drainage and promotion of Internet insurance companies, which leads to the above-mentioned abuse of insurance, so that some people use outpatient insurance to purchase drugs for others to make profits.

"Outpatient insurance is a consumer insurance, if you don't make a claim, the previous premium will not be returned, and some consumers will feel that they have lost money, which will increase the frequency of claims. Industry insiders believe that some consumers share their claims experience through social platforms, which also aggravates the phenomenon of "wool picking".

"Wool picking" not only involves the moral issues of consumers, but also touches the legal red line. There is a special reminder on the outpatient insurance direct claim service page of Zhongan Insurance: "The direct claim service is only available to the insured". According to Liu Xing, a partner at Hunan Zhongyi Law Firm, some consumers use the direct compensation service of outpatient insurance to obtain low-cost drugs under false pretexts and make illegal profits, which is suspected of insurance fraud.

Liu Xing said that insurance companies usually stipulate the conditions and restrictions for claims settlement in the contract, and if it is found that the policyholder's claim request is suspected of fraud, the insurance company has the right to investigate and refuse to pay. After fraud is discovered, the insurance company may take legal action to pursue liability, including refusing to pay the claim, recovering the claim paid, and possibly reporting the case to the appropriate authorities.

It is worth mentioning that the spike in the loss ratio may lead to an increase in the premiums of other policyholders or an adjustment of insurance products, thereby harming the interests of other policyholders. "Last year, the comprehensive loss ratio of our company's children's outpatient insurance was well over 100%, and the final result was that the product was taken off the shelves. A property insurance actuary told a reporter from the China Securities Journal. Another person from a property insurance company told reporters that the company launched outpatient insurance products in 2021, and then stopped selling due to business adjustments, and currently sells outpatient liability as an additional insurance for medical insurance.

The industry generally believes that the comprehensive loss ratio of short-term health insurance is 50% to 80% is more fair and reasonable. If the comprehensive loss ratio is too high, the insurance company will not be able to make ends meet, and eventually the product may be discontinued, and if the comprehensive loss ratio is too low, it means that the product deviates from the original intention of insurance protection, and the rights and interests of consumers cannot be protected.

An account of the insurance company

In the eyes of industry insiders, the phenomenon of "wool picking" in outpatient insurance products is related to the lower profit demand of insurance companies and insurance agencies for outpatient insurance, and their demand for customer acquisition is stronger. It is understood that at present, the cost of customer acquisition of insurance companies is not low, about 200 yuan to 300 yuan, so some companies will take the outpatient insurance with a low insurance amount as a "gift insurance" to attract potential customers.

"Under normal circumstances, for insurance companies, outpatient insurance is basically a drainage business, and even if there are some temporary losses, they are willing to continue to invest in it. A third-party source told reporters. Some people in the industry said that outpatient insurance products make up for the "shortcomings" of millions of medical insurance, Huimin Insurance and other products that only cover hospitalization liability, and do not require residents to have social security and other conditions, and the insurance scale is relatively relaxed, which has certain advantages in product design and product rates, which is conducive to insurance companies to quickly obtain customers, and then promote their subsequent purchase of other products of the company. Outpatient insurance is undoubtedly very suitable for the role of "drainage".

In addition, improving the related party ecosystem is also one of the important considerations for insurance companies. For example, Cathay Pacific Property Insurance and Zhongan Insurance are important partners of Ant Insurance's "Good Medical Insurance and Outpatient Insurance" products, while Ant Group controls Ant Insurance and Cathay Pacific Property Insurance, and is also one of the major shareholders of Zhongan Insurance.

"Under the direct compensation model, insurance companies and TPAs (third-party medical resource network providers) have cooperation, the cost of drug purchase is very low, and the profits generated by related party transactions between companies are not thin. Ding Liang, a veteran of the insurance industry, told reporters.

Due to the strong inclusiveness of outpatient insurance, the current expense rate of insurance companies to third-party sales channels is very low, but the expenses and profits generated by all related party transactions of various enterprises every year are not small.

"In view of the significant increase in the use of Ant Group's services under the Internet Platform Cooperation Framework Agreement, and the fact that ZhongAn Insurance can promote insurance products through Ant Group's extensive and diversified channels through the service, thereby converting the end users of these platforms to purchase ZhongAn Insurance Group's insurance products, it is expected that the total amount of service fees payable under the Internet Platform Cooperation Framework Agreement will exceed the existing annual cap. On April 3, Zhongan Insurance announced that the board of directors recommended that the upper limit of the total service fee paid for Ant Group in 2024 and the end of 2025 be revised to 3.186 billion yuan and 3.729 billion yuan respectively.

In addition, in the long run, industry insiders believe that obtaining residents' data on medication through outpatient insurance products will help insurance companies understand the health status and health management needs of residents, and then develop other insurance products and improve the insurance service ecology.

Many aspects need to be improved

In the eyes of industry insiders, the emergence of outpatient insurance is of great significance for enriching the variety of short-term health insurance products.

"Outpatient insurance is a progress and an attempt, in the past, commercial health insurance only covered hospitalization but not outpatient, this product is equivalent to an important step in outpatient medication, better meet the needs of customers. The person in charge of product development of an insurance company said that outpatient insurance is a "high-frequency and low-payment" product.

"Under normal circumstances, medical insurance with outpatient liability covers online consultation and offline outpatient emergency medical treatment, etc., and medication claims are only a small part of the service link. This type of outpatient insurance product provides users with convenient medical claims for minor illnesses. At the same time, at a more macro level, online consultation and direct medication reimbursement services can also help to classify diagnosis and treatment and save medical resources. A person related to a third-party Internet insurance agency platform told reporters.

However, in addition to innovation, some people in the industry believe that there is room for improvement in outpatient insurance products in product sales, underwriting and claims.

On the one hand, the product sales threshold and underwriting are relatively relaxed. "Some outpatient insurance products do not have health notices, and some products are just formalities. Ding Liang told reporters that for insurance companies, although they know that outpatient insurance is loss-making, but through the Internet platform drainage, there will be a steady stream of customers and premiums coming in, which makes insurance companies willing to "lose money and make money" in the face of consumers. It is worth mentioning that at present, many insurance practitioners and insurance sales channels even use "zero deductible", "wool picking" and "return to the cost once you settle a claim" as marketing gimmicks for outpatient insurance, which has the effect of encouraging consumers to "hoard medicines" or make excessive claims in disguise.

Product sales chaos may not be limited to consumers and insurers. Zhou Jin, PwC China Financial Services Consulting Partner, said that in order to achieve short-term premium performance targets, some grassroots staff of insurance companies collude with pharmacies or TPAs to obtain personal profits through "wool picking" or even fraud, which further pushes up the level of health insurance claims.

On the other hand, the product pricing mechanism of outpatient insurance can be further improved. "The outpatient insurance product has only been launched for about three years, and the industry lacks data and claims experience, and there are flaws in the actuarial aspects of the product. If the pricing is based on the actual insured population, it will fall into a negative cycle of high premiums and a decrease in the number of insured people, and lose the meaning of inclusiveness. A person from the product department of an insurance company said.

Strengthen refined management

The reporter learned that many insurance companies have paid attention to the behavior of "wool picking", and increased investment in scientific and technological risk control, and the current loss ratio has entered a stable range.

"At present, the loss ratio of outpatient insurance is relatively stable, and the loss ratio of various companies in the industry varies greatly, but basically it will not exceed 100%. However, there are insurance companies that do have a loss ratio of more than 100%. The head of product development at an insurance company said.

Li Lei (pseudonym), who has been deeply involved in the "Good Medical Insurance and Outpatient Insurance" product, said: "At present, our outpatient insurance products are in a small profitable state, with a loss ratio of about 80% to 90% and an expense ratio of about 5%. ”

The insurance industry is also actively tackling issues related to ambulatory insurance fraud. "For outpatient insurance drug direct reimbursement services, the Internet platform has established a comprehensive risk control system to monitor the risk of compensation, including verifying the incidence of diseases, the frequency of medication, and the average amount of each time. For abnormal drug use behavior, it is recommended that users seek medical consultation or offline medical treatment from the perspective of the user's health. In addition, it will also cooperate with insurance companies and public security organs to crack down on gangs suspected of fraud and recover claims. The above-mentioned third-party Internet insurance agency platform said.

Looking to the future, industry insiders said that in order to promote the sustainable and healthy development of outpatient insurance products, insurance companies should not be limited to acquiring customers and leading the scale of premiums, but should work hard in all aspects such as product design, underwriting and claims services and additional services, and put forward higher requirements for the process and refinement of their own operational capabilities.

The use of digital level to manage anti-fraud risks has become an important starting point for the prevention and control of claims risks. "Insurers should improve the underwriting process and strengthen customer identification. Establish policyholder credit files through big data technology to strengthen the correlation between policyholders' information and credit records. Hou Xuhua, a professor at the School of Accounting of Hunan University of Technology and Business, said that insurance companies can also actively build an insurance anti-fraud platform to detect potential insurance fraudsters as early as possible.

"The current industry experience of outpatient insurance is not enough, and the product has been in operation for a short time. To solve the problem of 'wool picking', it is necessary to control the consultation process, and customers cannot settle claims as soon as they have the need to buy medicines. It should not only meet the needs of customers for rational drug use, but also effectively manage the customers of 'wool', which should be the core essence of this product. The person in charge of product development of the above-mentioned insurance company said.

There's a lot more insurance companies can do. "For example, at the level of risk control, we monitor the abnormal compensation of consumers, set a reasonable medication cycle for drugs, and cooperate with the public security organs to crack down on the gang's 'wool picking' behavior. Another example is the service level, can our online services be better in the future, like the takeaway platform, to launch the same city express delivery service of drugs, to make the product deductible lower, to make the product compensation ratio higher?" Li Lei said.

In Ding Liang's view, the core of outpatient insurance is to provide high-quality medical services and a good user experience, and insurance companies and sales channels should continue to optimize the online consultation platform, improve the professional level of doctors, and reasonably issue and use electronic prescriptions. At the same time, it is necessary to rely on the resources and professional capabilities of some physical medical institutions to establish cooperative relations with more hospitals, expand the scope of services, and provide more comprehensive medical services.

In the context of marketization, industry insiders believe that insurance companies should do something about the innovative variety of outpatient insurance.

"This is a process of 'one foot high, one foot high, one foot high'. Wang Guojun, a professor and assistant dean of the School of Insurance at the University of International Business and Economics, said that insurance companies should do a thorough and detailed investigation and plug loopholes in a timely manner so that such product innovation can continue.

From the perspective of the public, experts recommend that consumers maintain integrity in outpatient insurance products. "Consumers should rationally purchase and use outpatient insurance, and it is recommended to connect it with critical illness insurance, life insurance and other products to form a mutual complement of risks. Liu Chunsheng, an associate professor at the Central University of Finance and Economics, said.

"The original intention of all insurance products should be to pay the money to the person who should be paid. Industry insiders said.