by PE KelleyMr. Kelley is managing editor of the magazine. Connect with him by e-mail: [email protected]
A new report published by the Shared Value Initiative in June, 2017, recognizes the Vitality business model, now deployed by five of the world’s leading insurers, as a leading example of shared value in insurance.
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.
We spoke with Brooks Tingle, President and CEO of John Hancock Insurance, the exclusive life insurance provider of the Vitality wellness concept, about the concepts behind Shared Value, and the implications they present for an advanced understanding of longevity, aging and the prospects for healthier living.
PEK: What was the genesis of Shared Value thinking, particularly when applied to this industry?
BT: Conceived by Harvard Business School professor, Michael Porter, Shared Value is created when companies recognize that there are tremendous opportunities for innovation and growth in addressing social problems as part of their business objectives.
Shared value in life insurance is grounded in the natural alignment that exists between consumer health and longevity, and the goals of the life insurance industry. When customers live longer, healthier lives that’s good for them and for their life insurers, who can benefit from the additional years of premiums, while society sees gains from increased productivity and lower health care costs. The Vitality Insurance model, developed by South African insurance company Discovery, is based on the shared value concept and draws on behavioral economics to incentivize people to live healthier, by sharing back a portion of the additional premiums taken in by an insurer. Recently, Professor Michael Porter recognized the Vitality model as an excellent example of shared value in a Harvard Business School case study.
Many health insurance companies already offer premium savings and rewards to people who take steps toward living a healthy life. And some car insurance companies offer discounts to customers who install a device that measures safe driving habits. While this incentive-based approach works well in these industries, it makes even more sense in life insurance, where policyholders can remain with the same company for decades.
PEK: Tell us about John Hancock Vitality, and its vision for blending core profit-making with large scale societal change.
BT: In recent years, life insurance ownership has been stagnant, resulting in far too many Americans not adequately protected, or not covered at all. At the same time, we know that Americans are living longer, but many are also in poor health and often suffering from chronic conditions. The good news is that these unhealthy trends can be reversed if we take positive steps to make better choices and improve our health-related habits.
With this in mind, in 2015 we launched John Hancock Vitality, a new kind of life insurance to help people live longer, healthier lives, through an integrated technology-enabled wellness program that is engaging, compelling and rewarding. When our customers live longer, we as a company make money, and through our Vitality program we share that value back with our customers in the form of premium savings and rewards. It’s a win-win for the company and for our customers.
PEK: John Hancock developed a wellness program influenced by the Insured Value model. How does that program work, and what differentiates it from others?
BT: Through our exclusive life insurance partnership with Vitality*, the global leader in integrating wellness benefits with insurance products, John Hancock offers an innovative life insurance solution, John Hancock Vitality, that gives consumers the opportunity to save significant amounts on their life insurance premiums and earn valuable rewards and discounts by taking small steps to live healthier lives. The program leverages proven science and technology to put customers on the path toward living longer and healthier lives.
With John Hancock Vitality, policyholders earn points for the everyday things they do to stay healthy such as walking, exercising, getting regular check-ups, and eating well. The more points they earn, the higher their Vitality Status and the greater their potential premium savings and rewards.
John Hancock was also the first in the U.S. to integrate its wellness-based life insurance with personalized health technology, such as Apple Watch, Fitbit and smartphone applications like Apple Health, making it easy for customers to participate in the program.
John Hancock has also established partnerships with leading organizations including the Friedman School of Nutrition Science and Policy at Tufts University that provides customers with evidence-based guidance they need to make smart food choices every day, and the American Diabetes Association to educate the 30 million Americans currently living with diabetes on the accessibility of life insurance, and to promote healthy living through John Hancock Vitality.
Consumers are actively engaging in the program, leading to a level of customer satisfaction that is unprecedented in the life insurance space. In fact, according to our NPS results, customers are recommending John Hancock Vitality two times more frequently than people who own traditional life insurance policies. Customer engagement with the program is giving advisors a chance to touch base more frequently with their clients and to build lifetime relationships.
PEK: Talk about the relevance of the Shared Value model with regard to ‘incentivizing consumers’ to make healthier choices and in so doing lead healthier lives.
BT: There is significant evidence that when you offer immediate rewards for healthy behavior, people make real progress and lasting change in their lives. The Vitality Shared-Value Insurance business model is grounded in behavioral economics, and incentivizes people to make healthier choices with premium savings and brand-name rewards and discounts.
There is clinical evidence that Vitality members are healthier, live longer and claim less. For example, in South Africa where Vitality was first developed more than 20 years ago, highly engaged Vitality members have a 76 percent lower mortality rate and on average live 14 years longer than the insured South African population.
In almost three years since John Hancock Vitality was launched, the program is working in terms of its fundamental purpose, which is helping people to lead longer, healthier lives. Today, John Hancock Vitality is providing thousands of our policyholders with the motivation to take small steps to live healthier, and recognizing their efforts with real premium savings and rewards. Our John Hancock Vitality customers are taking nearly twice as many steps as the average American consumer, and they are averaging 43 activities per month, as they earn points and enjoy rewards, premium savings, and access to health and wellness tips and resources.
PEK: How is the life insurance industry uniquely positioned to address some of society’s greatest challenges, while positively impacting the lives of its customers?
BT: When you think about it, other than your immediate family and friends, who should care more about your long-term health than your life insurance company? It’s eminently rational that we would be a partner in helping our customers achieve longer, healthier lives because it’s good for us, good for them and good for society. There’s 100 percent alignment of interests – we want our customers to live well, and they want to do the same. And given the long-term nature of life insurance relationships, a program like John Hancock Vitality can have a profound and cumulative impact on a person’s overall health.
PEK: Where does Shared Value thinking go from here?
BT: Shared Value is a powerful concept that is still evolving, but it’s truly exciting to think about the tremendous opportunity that exists for businesses to thrive in what they do, while addressing some of the world’s biggest challenges. Many top companies and organizations including GE, Nestle and Walmart have already benefited from an awareness of this approach, and with learning communities such as the Shared Value Initiative, corporate leaders can connect, share ideas and learn new skills. There’s no doubt in my mind that we’ll see Shared Value embraced even more broadly and globally by the corporate world in the very near future. ◊