A new report published by the Shared Value Initiative this week recognizes the Vitality business model, formed by Discovery and deployed by five of the world’s leading insurers, as a leading example of shared value in insurance. In the United States, John Hancock is the exclusive life insurance provider of the Vitality wellness concept and Vitality Group offers it as a corporate wellness program.
The report, “Insuring Shared Value: How Insurers Gain Competitive Advantage by Better Addressing Society’s Needs,” makes the case for insurers to pursue shared value, a business strategy that aligns core profit making activities with pursuing large scale social impact, by activating an entire ecosystem of complementary stakeholders to create, for example, more resilient and insurable cities or prevent ill-health in target population groups.
It is clear that insurers have the unique opportunity to “monetize” better health, and align their commercial interests with making society healthier.
Discovery Chief Executive Adrian Gore commented on the inclusion of the Vitality Shared-Value Insurance model in the report: “It is critical that institutions like ours add value to society and are not just about a transactional relationship. The profound thing about Vitality is that there are no trade-offs. Member’s experience better health, insurers have fewer claims and hence greater profitability and society benefits from healthier more productive citizens.”
Brooks Tingle, Senior Vice President, Marketing and Strategy, John Hancock Insurance, commented, “The life insurance industry is uniquely positioned to help address some of society’s greatest challenges and have a positive impact on the lives of Americans. Integrating life insurance with a wellness program, as we did when we partnered with Vitality to offer the first solution of its kind in the US, makes perfect sense because of the natural alignment between a person’s desire to live a long healthy life and an insurer’s long-term financial goals. Today, John Hancock Vitality is providing thousands of our policyholders with the motivation to take small steps to live longer, healthier lives and recognizing their efforts with real premium savings and rewards. It’s a true win-win for our customers, our company, and society as a whole.”
The research also identifies a number of powerful global trends that are affecting society and the environment and, therefore, the context in which businesses operate.
The Vitality Shared-Value Insurance model is increasingly relevant because it is responsive to current trends and addresses changing realities, including the demand for corporate citizenship, increasing burden of lifestyle diseases, ageing populations and the emergence of technology. Increasingly, four types of behavior (poor diet, physical inactivity, tobacco use, and excess alcohol intake) are causing preventable diseases which lead to 60% of deaths worldwide.
Grounded in behavioral economics, the Vitality Shared-Value Insurance business model incentivizes people to make healthier choices and dynamically rewards them for reducing their risk, in the form of premium reductions and other benefits. There is clinical evidence that Vitality members are healthier, live longer and claim less. For example, in South Africa where Vitality was created 20 years ago, highly engaged Vitality members have a 76% lower mortality rate and on average live 14 years longer than the insured South African population.
By incentivizing behavior to achieve healthier outcomes, Vitality enables a lowering of risk, thereby generating value for insurers and society.
About Discovery and the Vitality Group
Discovery Limited is a South African-founded financial services organization that operates in the healthcare, life assurance, short-term insurance, savings and investment products and wellness markets. Founded in 1992, Discovery is guided by a clear core purpose – to make people healthier and to enhance and protect their lives. Underpinning this core purpose is the belief that through innovation, Discovery can be a powerful market disruptor and a force for social good. To pursue this goal, Discovery employs its Vitality Shared-Value Insurance model, which incentivizes healthier behavior for the benefit of clients, insurers and society. With headquarters in Johannesburg, South Africa, Discovery has expanded its operations globally and currently impacts 6.9 million lives in 15 countries and has close to 12,000 employees worldwide.