Health insurers need to make a change fast, according to a new report from investment firm the Psilos Group. The group's 2014 Healthcare Outlook report contends that the shift in insurers' customer base from mostly employers to mostly individuals, spurred by the Affordable Care Act, will lead to a major shift in how the insurance market works.

“The health insurance industry’s 50-year legacy as a business-to-business model is on the edge of irrelevance,” Steve Krupa, managing member of Psilos Group, said in a statement. “The health insurance market is rapidly shifting to 40 percent individual policies from just 10 percent prior to the Affordable Care Act. A change of this magnitude affects every stakeholder in healthcare. However, with this change comes an enormous opportunity for forward-thinking companies and new investment.”

In a call with MobiHealthNews, Krupa stressed that up until now, insurance companies have looked at individual consumers as end users, but not, by and large, as customers. To sell to individuals, insurance companies need to find ways to become trusted consumer brands.

"Today, most people have interactions with their insurance companies under strife. They’re sick, they just got injured, they’re trying to pay the bills of a family member that just had surgery," he said. "They don’t have a relationship with their insurance company until something like that happens, and by that very nature, that relationship is going to be strained when it becomes activated. So I think the insurance companies have to figure out how to activate that relationship during other times." 

But just changing the branding without changing the product won't be enough for insurers to win in a post-consumerization world. The report lays out changes insurance companies should make along every step in the company's value chain: research, product development, supply chain management, provider network management, operations, and marketing.

The changes laid out under those sections are wide-reaching, encompassing more cost transparency, a la carte purchasing options, and consumer-facing products like patient health portals, claims calculators, and health engagement rewards programs. Krupa identified claims management as one of the most important areas, citing Cognizant's acquisition of TriZetto as an example of the sort of investment insurers will start to make in improving those systems.

"I look at how insurers pay claims, manage data, transmit that data, and how they make it available to various stakeholders, and it doesn’t have the same robustness and modernness of most other industries that serve consumer interests," he said. "And I think that’s an important part of where things are headed and I think that as they begin upgrading that area of their business, it will make it more logical as to how they add other features to their product that will appeal to consumers."