Health insurance season 2027: first innovation, or the old price game with the handbrake on?

The old game: profit on the price shopper

Before Constrained Regression the market was simple: the price-driven switcher (more often young and healthy) versus the loyal value seeker (more often older and using care), who is willing to pay more for service, cover and freedom of choice. The price shopper came out of risk equalisation so favourably that they were profitable even at a low premium; the security seeker cost more after equalisation than they were willing to pay. Large brands therefore focused on retention in their main label and offset the shrinkage there with flanking labels for price shoppers. The game revolved around product and price tactics. Whoever topped the rankings one year won hundreds of thousands of customers, and often lost half of them again the next.

Constrained Regression turned the game around

Since Constrained Regression, the post-equalisation costs of healthy switchers and loyal security seekers are close together. But the difference in willingness to pay remained. The margin now suddenly sits with the loyal value seeker – whoever wins there can afford to be sharp on the price shopper, where margins are thin or negative. The goal is no longer maximum growth among price shoppers, but maximum growth among value seekers. Good news for the system: it pays again to win customers on quality, access and service.

Customers were already ready

The success factors in today's market are therefore value propositions that convince on more than price. Customers are ready for them: the dogma that customers choose on price alone is too simplistic. Research has shown for years that most Dutch people first select on brand, service and mediation, contracted care, freedom of choice and orientation channel – and only then on price within that set (see for example Centerdata, 2022). The arguments for attracting customers on more than price always existed; there was simply no incentive to build propositions on them. That incentive is now there.

Yet the propositions fail to appear

Yet two years after Constrained Regression we still see hardly any value propositions. Not because they failed, but because serious attempts never happened. Five barriers stand in the way of insurers taking this step:

1. The conviction is missing. In recent years the market has been so fixated on ‘price shoppers’ that the dogma ‘the whole market chooses on price alone’ has become a self-fulfilling prophecy. Does the market really choose on price alone, or did it aim its commercial machine mainly at that group for decades, so that the rest never moved? It is true that there is uncertainty about whether customers can be won on more; the proof that it can be done, and where, has yet to be delivered. But that search should be a top priority.
2. The arguments have already been claimed. Broad cover, strong brands, wide contracting and the best service have for years been given to the existing, inert base – at the matching price. Winning new customers on those grounds at a sharper price requires walls between growth and base propositions. It requires suddenly labelling existing ‘shrinking niches’ such as ‘group schemes’ and ‘freedom of choice’ as growth markets. And it requires a clear split in one's own thinking between propositions for the loyal, inert base and propositions for new growth. That sharpness does not always find its way into strategy yet, where the two are often blended again.
3. A new moral dilemma. The old game was to have customers each pay a different price for the same access to and quality of care and service. While moral scruples about that have disappeared for almost everyone, the current phase calls for offering customers differences in the quality of and access to care, depending on what they – or their employer – are willing to pay for it. With new dilemmas: queue-jumping care, access that turns from a ‘right’ into a ‘luxury’, a two-tier system, and so on. The market is wary of experimenting here.
4. The wrong definition of success. A proposition that attracts 10,000 loyal customers and grows to 100,000 in five to ten years is a success in this market. In the old game that was a rounding difference on a single comparison-site profile. It now means investing more for less volume, with the rationale in loyalty and customer value. But if that perspective is not part of the business case, initiatives quickly die in beauty.
5. Different capabilities. Growth used to be determined by the engine room of market intelligence, Product and Finance. Proposition marketers worked on ‘proposition development’, but at the margin: implicitly aimed at keeping the higher prices for loyal customers explainable, and already a success if 10% of the base used the service or downloaded the app and showed slightly higher retention. Gimmicks at the margin of a proposition that ran on product and price. Creating a value proposition takes more: finding real needs that customers choose on independently and are willing to pay for, on which they trust their insurer, and delivering real proof on them.

The answer: greenfields

It is not easy, but it is necessary. The task for the commercial board is to build greenfields: propositions that are designed, validated and, if successful, scaled up independently of existing bases and interests. That takes three things: the conviction that there are target groups who switch on more than price, a sharp upfront conversation about moral boundaries that the executive board sets explicitly, and a Finance function that values small volumes when they carry customer value.

Innovation, or the old game with the handbrake on?

Will we see the first steps in this direction this season, amid all the price and media noise? If not, we get the old game with the handbrake on. Nobody wants to grow among price shoppers, but there is no other growth. And staying stable hardly exists: whoever is poorly positioned on the profiles where their base sits shrinks; whoever is well positioned grows. Most players will therefore shrink too much or grow too much. If that is next season's market game, the hope is that the reflex to these disappointing results is to break down the barriers – and not the next round in the price market.