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Why shared value insurance now resonates more than ever

Published: 22nd December 2020

The importance of controlling key lifestyle risk factors

Of the many things the Covid-19 pandemic has brought to light, perhaps one of the most relevant to emerge has been how keeping your key lifestyle risk factors under control can be beneficial, not just against the effects of the virus, but for your general long-term health. It’s a point UK Prime Minister Boris Johnson made himself recently, acknowledging how his physical health may have exacerbated the severity of his experience with the virus .

To an extent, this is simply re-iterating something we’ve known about for some time: the fact that around 60% of all avoidable deaths in the developed world are linked to four key lifestyle trends – lack of exercise, obesity, excessive alcohol consumption and smoking . By any measure, it’s an alarming statistic, not least for the world of protection in its current guise, which continues to assume that risk is static, evaluated once at the start of the plan and no more.

This assumption has always been something we’ve challenged. For example, given these current lifestyle trends, is it really reasonable to think a 55 year old will represent the same level of risk to an insurer as when they took out a plan 20 years earlier? We would argue not, and the evidence would appear to support that.

Encouraging positive behaviour change

With a core purpose of making people healthier, enhancing and protecting their lives, we feel we have a responsibility to inform our members what the potential risks of certain lifestyle behaviours are to their long-term health. Furthermore, it’s not enough just to tell people what they’re doing ‘wrong’. We also believe that the best way to change behaviour is to ‘nudge’ it in the right direction.

Sharing the benefits through Shared Value

The term we use to describe this is Shared Value. Essentially, encouraging our members to adopt healthier lifestyle habits reduces their insurance risk and creates value for us. However, rather than keep all of that ourselves, we choose to share the value those healthy actions create. Call it an incentive. Call it a thank you. Call it a fairer way to do business.

Creating a virtuous behavioural cycle

What this does is help create a virtuous cycle of positive behavioural reinforcement: the more healthy things our members do, the more we can pass the savings those actions create back to them. This can take the form of lower premiums, a range of discounts and regular rewards.

Our Optimiser benefit, is available on all our Life plans, illustrates the idea of Shared Value perfectly. When a member takes out their plan, we give them an upfront discount in exchange for annual premium changes based on the level of engagement with their health through Vitality. By taking steps to look after their health – having regular checks, getting active and eating well, for example – they can keep their premiums low for the lifetime of their plan. At the same time, they can also make savings with our partner discounts and rewards.

Insurance that gives back

This all creates a sense of engagement largely absent in other insurance plans, where the default is to buy your plan, put in a drawer and never look at it until you have to claim. So what Shared Value also does is help to foster a sense of loyalty, because you get something back for the premiums you pay. This doesn’t just benefit the insurer. It benefits the adviser, too, because clients are more likely to recommend more people and, because of the benefits of Shared Value, they also tend to stay longer.

Helping create a healthier world

There’s a wider aspect to all of this. By helping people stay healthy, society also benefits from a lower healthcare burden – and more productive workplaces, too, by the way. And as we put more into our plans and rewards – continuing to share the value of positive lifestyle choices – we keep the cycle of better living flowing for everyone. It’s why we say that Shared value is good for clients; good for advisers; good for us; and good for society.

2. Communicating Non-Communicable Diseases, The Vitality Institute, 2016

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