Insurance Innovations with Wearables and Wellness Programs

Insurance Innovations with
Wearables and Wellness Programs
Simon Pang
13th November 2015
The changing world we live in
What will life and living benefits insurance look like in 2020?
 Wearable biometric device usage
• Nearly ubiquitous with these devices used to gather and transmit personal data for use by life and
health insurers
 Continuous underwriting
• Data used for decisions will be automatically sourced rather than “provided”
 Loyalty Programs
• Loyalty programs to enhance customer engagement and make benefits immediate and tangible
 Upsell Cross-sell Offers
• Made more frequently and automatically to existing customers
 Claims Management
• Happens before the claim has occurred through risk identification and behavior modification.
2
The changing world we live in
Causes of death
Wearable Technology
Loyalty Ubiquity
Pace of PD
Use of Big Data
3
3
The changing world we live in
US Cause of Death Trends 1900 - 2010
Causes of death
100.0%
90.0%
80.0%
Wearable Technology
70.0%
60.0%
50.0%
40.0%
Loyalty Ubiquity
30.0%
20.0%
10.0%
Pace of PD
0.0%
1900
1910
Chronic
Use of Big Data
Source: New England Journal of Medicine
1920
1930
1940
1950
Other Non-communicable
1960
1970
Communicable
1980
1990
2000
2010
Non-Medical
Chronic diseases, which wellness can materially influence, are
now more than 80% of US deaths
4
The changing world we live in
Shipments of Wearable Computing Devices
Causes of death
Wearable Technology
160
140
120
100
80
60
40
20
0
2013
2014
Healthcare
2015
Activity Trackers
Other
Loyalty Ubiquity
Pace of PD
Use of Big Data
Data (petabytes/month)
Global Wearable Device Data Traffic
70
60
50
40
30
20
10
0
2013
Source: Cisco Systems, MobiHealthNews
2014
2015
2016
2017
2018
Year
5
The changing world we live in
US Members of Loyalty Programs
Causes of death
Wearable Technology
# of members (billions)
3.5
Avg. household has 29
programs
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2006
Loyalty Ubiquity
2008
2010
2012
2014
Discovery Global Membership Growth
Pace of PD
Use of Big Data
Members (millions)
7.0
6.0
4.0
3.0
2.0
1.0
0.0
1997
Source: Colloquy, Maritz, Personal Finance, Discovery
Exponential growth
5.0
1999
2001
2003
2005
2007
2009
2011
2013
6
The changing world we live in
# of New Risk Products Launched per Year
4
Causes of death
3.5
3
2.5
2
1.5
Wearable Technology
1
0.5
0
Americas
Loyalty Ubiquity
EMEA
APAC
# of New Living Benefits Products Launched per
Year
3.5
Pace of PD
3
2.5
2
1.5
1
Use of Big Data
0.5
0
Americas
Source: RGA Global New PD Survey 2014
EMEA
APAC
7
The changing world we live in
Google Trend on "Big Data"
120
Causes of death
Google Scale
Wearable Technology
100
80
60
40
20
0
2010 - Present
Loyalty Ubiquity
# of RGA Predictive Modelling Exercises
30
25
Pace of PD
20
15
10
5
Use of Big Data
0
2010
2011
2012
Client
Source: Google Trends, RGA R&D
2013
2014
Internal
8
The changing world we live in
Loyalty Programs
Wearable Technology
Product Development
Causes of Death
Big Data
Wellness
9
Wellness Programs
What is happening?
 Use of wellness programs to incentivize healthy behavior.
 Insurers aligning themselves with health/fitness providers allowing access to services at reduced rates.
 Insurers providing incentives for policyholders to improve health via financial rewards e.g. discounted
flights, free calls etc.
 Some insurers offering renewal premium discounts, which also improves persistency.
 Programs launched in the US, South Africa, UK, Australia, Singapore and Hong Kong.
What is driving this trend?
 Recognition of alignment of interests between the insurer & consumer.
 Increase in general awareness to stay healthy.
 Technology trends e.g. smartphones and wearables.
 A desire to create a framework for integration and big data.
 Need for differentiation and more attractive propositions as protection and Accident and Health
products become more core.
10
Insurance wellness program introductions accelerating
 Sales – Encourages those in good health to buy products with wellness programs.
 Profitability – Improve the claim/lapse experience and therefore profitability of the business
with wellness programs.
 Branding – Good publicity for the company by encouraging wellness for the general public.
Hong Kong – Manulife
Hong Kong – AIA Vitality
1997
11
John Hancock Vitality
People who sign up will receive a free Fitbit monitor, which can be set to automatically upload activity levels to
the insurer. The most active customers may earn a discount of up to 15 percent on their premiums, in addition to
Amazon gift cards, half-price stays at Hyatt hotels and other perks.
All customers participating in the program will start by paying a premium priced at the gold level. That is a
discount of about 9% for a 45-year-old man who bought a $500,000 term insurance policy that covered a 20-year
period: He would pay $750 annually, compared with the $825 it would cost outside of the Vitality program.
Source: https://www.johnhancockinsurance.com/life/How-It-Works-Vitality.aspx
The New York Times – April 8, 2015
12
12
Discovery Vitality Active Rewards
 Vitality Active Rewards
gives a personalized
fitness goal to each
member.
 Members can then earn
weekly rewards for
achieving their goal.
 They can earn another
reward if two or more of
their friends also reach
their fitness goals.
Vitality members receive a free Apple Watch and it remains free as long as the
member achieve 4 weekly goals. If the member does not achieve the weekly
goals they will they have to make a monthly repayment for the Apple Watch.
Sources:
https://www.discovery.co.za/portal/individual/active-rewards
http://www.igenius.co.za/blog/free-apple-watch-with-discovery-vitality
13
13
AXA France
“Jog your health with AXA”
 To help policyholders maintain their health, AXA offered a Withings Pulse, worth € 99.95 for the first
1,000 customers who purchase supplemental health coverage via their call center or website.
 Customers will need to register their device online and agree to give AXA access to their step data.
 Must use the device for 5 days out a week and for 4 consecutive weeks.
 Customers that take 7,000 steps in one month obtain one €50 voucher for medical services and
obtain a 15% discount off all Withings products available on their website.
 Customers that take 10,000 steps in one month obtain two €50 vouchers for medical services and
obtain a 20% discount off all Withings products available on their website.
14
Wearables – Rise of the Quantified Self
The Basics
 Wearables devices are capable of tracking data relative
to the wearer’s physical health and exercise e.g.
pedometers, heart rate monitors, activity trackers and
smartphone applications.
 People of all ages, weight and gender are embracing
wearable fitness devices offering real-time data to track
their physical activity.
 Although wearable device shipment volumes were
around 19 million units in 2014, that figure will grow to
over 100 million in 2018, according to IDC research.
15
Role of Wearables
What role are wearables devices playing in the insurance space?
Customer
• Health Awareness
• Improve Lifestyle Habits
Insurance
Risk
• Claims Prevention
• Early Detection
• Data Collection / Continuous Monitoring
Marketing
• Increase Touch Points
• Positive Branding
16
Role of Wearables
What are the challenges in leveraging wearables in the insurance space?
 Accuracy of devices?
The Economist:
 Compliance with use?
the market for health monitoring devices comprises
“…an eclectic mix of early adopters, fitness freaks,
technology evangelists, personal-development
junkies, hackers and patients suffering from a wide
variety of health problems”
 Consumer loyalty?
 Pace of technology
development?
Unmonitored Majority
 Limited market largely to
Motivated Healthy and the
Chronically Ill…?
Information
Seekers
Motivated
Healthy
Wearers
Chronically Ill
Wearers
Sources:
The Economist: The quantified self: counting every moment. March 3, 2012.
17
Wearables – Rise of the Quantified Self
The right incentives motivate change
Vitality studies show that hospital costs were 6% lower for those members who were inactive and became active, and 16% lower
for those members who were active throughout the study compared to those who remained inactive.
Source: Vitality Technical Brief: Wearables at Work
18
Does Walking More Really Improve Health?
We have the wearables to track the steps and biometrics – so…?
A 10 years Australian study found linearly correlation between daily steps count and mortality improvements.
Mortality Ratio vs. Steps Count
On average for every extra 1,000
steps taken, mortality is improved by
approximately 6%. The
improvements are visible even if the
lives have suffered from poor living
habits or chronic diseases
Adjusted Hazardous Ratio
Per 1,000 Steps Increase
Male
Female
8%
4%
BMI overweight
BMI normal weight / obese
6%
9%
Ever had hypertension
5%
Ever had diabetes
14%
Smoker
Non-Smoker
3%
6%
Source: PLOS ONE – Objectively Measured Daily Steps and Subsequent Long Term All-Cause Mortality: The Tasped Prospective Cohort Study
19
What’s really driving behind
any successful wellness
programs with the use of
wearables?
20
Behavioral Science & Changes in Habits
 We humans prefer small payoffs now over larger
payoffs later, which leads us to largely disregard the
future when this involves sacrifices in the present.
 We therefore prefer to forego long term survival and
comfort in favor of the short-term pleasures of
unhealthy food and laziness.
 We also tend to overestimate our abilities and health
status (too optimistic).
 We thus need immediate rewards (financial) to take
action.
21
Alfa Bank Russia
 Alfa Bank uses activity trackers to offer higher
interest rates to customers who exercise.
 Customers connect their activity tracker to their
savings account online to use the service. Then,
with every step they take, money is transferred from
their current account into a special savings account
with a higher interest rate.
 Users can choose how much money is transferred
per meter walked, from 1-50c, and a maximum
25,000 meters per day can be moved into the
savings account.
 According to Alfa Bank, customers using the service
are saving up to twice as much as the average and
walking 1.5 times as far.
22
Habits are hard to change?
The only way to change a habit is to replace it with a healthier one
Wearables measures
the habits and collect
data information
Computation
technology tracks and
analyze data, create
suggestions and
warning signals
Source: Corporate Wellness 360 - Smart devices as game changers
Provides
valuable
suggestions
to
incentivize
healthy
habits
23
Behavioral Change
Source: Withings Corporate Wellness Report
24
Hyperbolic Discounting as applied to Wellness
100%
Hyperbolic discounting is the human
tendency to prefer smaller payoffs now
over larger payoffs later, which leads
one to largely disregard the future when
it requires sacrifices in the present.
90%
80%
DISCOUNT
70%
60%
50%
Consider the following the options for
smokers:
40%
30%
A. Continue to smoke, get a small pleasure
right now (immediate utility = 10)
20%
10%
0%
0
1
2
3
4
5
6
YEARS FROM NOW
7
8
9
10
B. Quit smoking, doesn’t get any immediate
pleasure (immediate utility = 0) but will be
healthier in 10 years (10-year utility =
100)
25
Hyperbolic Discounting as applied to Wellness
Utility at
T=0
Utility at
T=10
Continue
smoking
10
10
Quit
smoking
0
100
100
90
80
APPARENT UTILITY
70
60
50
40
30
Continue to smoke
20
Quit smoking
10
0
0
1
2
3
4
5
6
YEARS FROM NOW
7
8
9
10
People usually choose to continue smoking
because they discount the future health too
much (i.e. red line is higher than blue line at
T=0)
We would need provide immediate incentives
to counteract the hyperbolic discounting (i.e.
shift the blue line upward)
26
Key Learnings and the Future
27
South Africa Benchmarking Trip Key Learnings
 In October 2014, RGA accompanied a consortium, sponsored by the Japanese Ministry of
Economy, Trade and Industry (METI).
 Key Findings:
o Wellness allows insurance companies to collect health related and customer data, increase
customer engagement and attract and retain the best risks.
o Important to identify and help change modifiable health behaviors that drive health care costs.
o Programs tend to work better with individuals making a conscious decision to join.
o By charging a fee, customers are more motivated to use the service and to value what is on offer.
Perceived benefits of the program however need to outweigh the actual cost of membership.
o Discovery obtained a huge first mover advantage as competing companies were slow to react.
“ We are in a war against the tobacco and unhealthy food
companies ”
“ It’s all about the data ”
28
Key Success Factors
Recipe for Success
Incentives &
Motivations
Big Data &
Technology
Easy
Simple
Achievable
Sizable
Financial
Reward
External
Partners
29
Hi Oscar
Health Insurer changing the game
 Using technology and design to make healthcare simple, intuitive,
and human.
 Tell us your symptoms to get started.
 You can shop for a doctor and pick one you like or just click to talk
with a doctor right away.
 Then see all your visits, prescriptions, and lab work in an intuitive
timeline.
 Stay in shape with a free Misfit Flash fitness tracker. Sync with the
Oscar app to count steps and earn $1 when the daily goal is
reached. You can get up to $240 each year just for being active.
“Oscar has the new-era tech pedigree to become the Spotify, Airbnb or Uber of
health insurance”
New York Times
Source: https://www.hioscar.com/
30
“ Discovery is excited to be partnering with HLI in bringing affordable genome sequencing to large
numbers of its clients in South Africa and the United Kingdom. We believe that this is a pioneering
approach in global health insurance, and will enable us to provide our clients with the world's most
advanced, current knowledge on their genetically determined disease risks, as well as on
personalized health, wellness and medical treatment strategies. In addition, the de-identified
genomic data will be used for extensive ongoing research with numerous collaborators around the
world, and we are excited that together with our clients, we will be able to make a material contribution
to global research efforts aimed at improving the health of populations and reducing the growing burden
of diseases of lifestyle ”
Dr. Jonathan Broomberg, MD, Ph.D, CEO of Discovery Health
Source:
http://www.prnewswire.com/news-releases/human-longevity-inc-and-discovery-ltd-to-offer-whole-exome-whole-genome-andcancer-genome-sequencing-to-discovery-insurance-clients-in-south-africa-and-the-united-kingdom-300146823.html
4
31
How Will The World Look Like In The Future?
Longevity Can Be A Reality!
32
©2015 RGA. All rights reserved.