Insurance health programs are relatively new in Australia, despite having been around overseas since the late ‘90s. More Aussie advisers, however, are using them as a way to improve client engagement.
Recent research into new healthcare intervention measures indicates that many health programs, despite their good intentions, fail to realise their potential because they require information, expertise and self-control that few clients possess.
As a result – and as a way to improve client engagement – insurers are using behavioural economics principles in incorporating incentive-based strategies into their health programs.
Dave Slovinec, state director at the Association of Financial Advisers, says health and wellness programs can be an effective client engagement tool, noting that they have worked overseas, including in the South African market.
“It’s still very new to the Australian market, so it’s a good conversation piece to have with people in terms of getting people in the door,” he says.
Mr Slovinec says that while such programs do not bring clients in based purely on the program alone, they offer clients a greater emphasis on their own personal health.
Health programs, he adds, are a great way to keep clients involved with their advisers as well as giving insurance companies a bit of marketing exposure to these clients.
The Vitality program
AIA Australia, through its Vitality program, is just one example of an insurance company that is capitalising on such marketing exposure
The Vitality program is currently available to more than 5 million members in several countries, including in its principal base in South Africa, as well as in the US, the UK and China and, more recently, Australia.
AIA Australia’s chief retail insurance officer, Pina Sciarrone, says Vitality is a program that the organisation first began looking at some time ago.
“We just celebrated the second anniversary of Vitality in Australia, but even prior to that it was probably about three years before that it was in the making,” Ms Sciarrone says.
“It just makes sense that a life insurance company is looking at the health and wellbeing of its clients.”
AIA’s Vitality program comprises three steps: ‘Knowing your health’, ‘Improving your health’ and then ‘Enjoying the rewards’.
Knowing your health
In the first step, clients can undertake a range of assessments, both online and in-person, in exchange for ‘reward points’. These range from dental to nutrition and fitness to mental wellbeing assessments. The principal online assessment provides clients with a comprehensive review of their health risk in calculating a risk-adjusted ‘Vitality Age’, which is based on a clinically- and actuarially-derived algorithm.
Improving your health
The second step, ‘Improving your health’, encourages clients to become more physically active and to make better lifestyle choices such as quitting smoking and engaging in physical exercise in exchange for more reward points.
By way of further encouragement, clients are given discounts on gym memberships and fitness devices and phone and computer apps.
Much like step one, access incentives are used to lower barriers and increase client engagement.
Enjoying the rewards
In the final step, customers use the reward points accumulated through the activities completed in steps one and two to obtain discounts on lifestyle and travel rewards, such as flights, food and gift cards.
More notably for advisers, clients can reduce their insurance premiums on eligible policies purchased through AIA. The caveat, however, is that this only applies to policies purchased through a financial adviser.
Ms Sciarrone describes the Vitality program as a win-win-win option.
“If we can invest in making our clients healthy, it’s a win for them because we’re educating them around their health,” she says.
“It’s a win for the insurance company in that … potentially what we’re doing is improving our claims experience, so that’s a positive for us and we can re-invest what comes out of that, in terms of that positive claims experience, back into our clients.
“And then it’s a win for society in that we’re producing a healthier nation,” she concludes.
Producing a healthier nation means less strain on public services, says Ms Sciarrone, citing the example of South Africa, where there has been a reduction in hospitalisation rates as a result of improved public health.
An adviser case study
Jade Burford, principal of risk management with Perth-based Advocate Private Wealth, has long been a user of health programs from back when specialist insurer Discovery pioneered the Vitality program in her native South Africa.
Implementing AIA Australia’s Vitality program has helped improve Advocate’s adviser offering, creating an elegant link between health and wealth for her clients, Ms Burford says.
“Vitality is not an add-on for us; it’s very much a big part of the discussion from the outset,” she explains.
“When I discuss insurance with my clients and discuss the program with them, it’s about aligning the program with their health and wellness goals to make sure that it’s a good fit.
“If you sell it as an add-on, you’re not going to get the engagement that you need to actually make a difference.”
Ms Burford notes that Advocate’s client retention rates are much higher and that there have been more referrals since the firm signed on to the program.
“From 1 July until now, around 78 per cent of my new clients have been referred from existing clients for the Vitality program,” she says.
“If that doesn’t speak volumes, then I’m not sure what does.”
A growing trend
AIA’s Ms Sciarrone says that, overall, the life insurer has around 2,000 advisers who are attaching Vitality to a life insurance policy.
“With every insurance policy that comes in, 40 per cent of those have got Vitality attached to them,” she says, “and we believe that we will soon get to that 50 per cent attachment rate which was what our initial goal was”.
AIA has approximately 16,000 members all up, she says, which is halfway toward the firm’s target number of members AIA wants to be brought on board through advisers.
However, Ms Sciarrone’s target number for memberships alone is much loftier.
“We definitely want to grow this to be in the hundreds of thousands, and so our goal is to continue to grow this quite substantially throughout Australia,” she says.
The AFA’s Mr Slovinec says insurance health programs will become part of a growing trend to promote healthy lifestyles within the financial advice industry, and they are not merely a passing fad.
“There are more and more insurers getting involved,” he says.
“Asteron led the way many years ago with their healthy lifestyle deal that they had going on, and then AIA obviously launched Vitality which was the next step up from there.
“I think with the use of smart watches and fit bits becoming more prevalent in society, Australians are looking for more of those sorts of deals and motivations to keep them healthy and keep them moving,” he says.
As for advisers who may be thinking about implementing a health and wellness program within their firm, Mr Slovinec advises that they have to live and breathe it themselves.
“I think they’ve got to understand it. It’s something that’s not just a fad or something you can read up on,” he says.
“I actually think it’s something that you have to believe in yourself, and you’ve got to be engaged in it if you’re going to pass on that advice to your clients.”
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