Why Health & Wellness?
“Prevention is better than cure,” is a core principle of healthcare. With an ageing population that is more aware than ever of how individual lifestyle choices can impact their morbidity, the Health & Wellness industry has been taking priority in a post-covid world. Consumers are continuing to spend more on products that improve their health, mindfulness, fitness, nutrition, and sleep. The size of the wellness market worldwide stood at 4.37 trillion U.S. dollars in 2020. This figure is projected to grow to almost seven trillion U.S. dollars by 20251 with personalisation, interconnectedness and improvements in technology being key factors underpinning the growth. The market expansions and optimistic growth predictions have encouraged life and health insurers to invest and develop new H&W solutions that promote and support sustainable healthy lifestyles physically, mentally, and financially.
Insurance-linked wellness programs within the health and life insurance industries have existed for years, but the strategies behind these programs' ability to effectively scale up have lacked. The rapid growth in both global and Asian health markets is ripe for new business opportunities. These opportunities should aim to improve the wellness outcomes of individuals through delivering financial benefits, encouraging sustained healthier habit formation, and overall improvement of physical, mental, and financial well-being. The market growth has been driven by tech, with individual data collection creating a personalised, gamified, and interconnected health journey for the consumer. The benefits of these wellness-linked insurance programs work twofold for the consumer; potential rewards, discounts, reimbursements, technology- enabled wellness tracking, data privacy and healthier and longer lives. For insurers, integrating wellness into products can facilitate upselling, data collection for risk assessment, and enforcement optimization through better policyholder health, among other advantages.
What to remember when incorporating H&W into your strategy
Embed H&W into the core business strategy by allocating resources away from outdated legacy systems and into potentially disruptive initiatives. “Nothing comes from nothing; if a company wants to innovate, it must allocate resources to innovating.” Innovate distinct product-development pathways and processes that integrate and support or expand into new core business functions. Shifting internal resources to H&W business initiatives can rebalance product portfolios to move away from near-term product improvements and toward potential breakthroughs or new business models—forms of innovation that often hold greater potential to generate sustainable sources of growth and outsize returns.
Firms' key stakeholders should articulate objectives and outcomes up front to ensure decisions are carried through both the short and long term. The innovation strategy can be incremental, as opposed to one lump sum investment. However, firms need to agree on standardising success measurement, to enable regular, consistent, and non-onerous reporting. New digital health tech and integrated solutions deploy a range of health technology assets, proprietary data analytics and extensive health expertise that can provide key competitive advantages in developing advanced H&W solutions for clients and consumers. To capture the transformative potential of new digital health tech and integrated solutions, there needs to be a full commitment to a holistic strategy that circumvents the shortcomings of previous projects and paves a pathway for an ecosystem strategy- ensuring the new H&W strategy is a virtuous cycle:
It is important to ensure that H&W initiatives are developed in a way that is compatible with existing core business functions. The aim of the program should have goals aligned with core functions, as well as seek to improve the health and well-being of customers. We have seen examples of siloed H&W solutions come to market, most of which have struggled with engagement, and as a result has had apps rated poorly by the public. To increase the success rate of the new H&W initiative these solutions should seek to create a virtuous cycle that expands business opportunities.
For customers, it is important to realise carriers are being expected to adapt products to deliver a more personalised experience. The personalised experience is crucial to obtain health data necessary to create customised product offerings. Customer engagement will drive the H&W solution, with gamification being a key factor in bringing about consistent usage and habit change. There are several behavioural science techniques proven to be effective, such as goal setting, performance feedback, reinforcing behaviour with rewards and punishments, and fostering friendly competition.
Data is the core of the solution through a H&W lens. Wearables and the availability
of well-being data creates opportunities for life and health insurers to engage with
consumers in new ways, such as simplifying the onboarding process, engaging with
customers in more personalised manners and modernising the underwriting journeyoffering individualised tailored propositions. Insurers already have masses of historical data- age, gender, address, smoker or, claims data – which once audited, transferred from legacy systems, and data gaps are identified can be combined with wearable well-being data to give insurers deeper understandings of the customer and tailor their products where necessary with a process called ‘dynamic underwriting.’
Dynamic underwriting has gained significant traction from the heightened popularity of wearables. The data provided from wearables can be seen as an excellent fit for dynamic underwriting as the data is widely available and easy to access. When combined with historical data, it can be used to promote policyholder H&W on an ongoing basis, allowing insurers to incentivize and reward positive behaviour.
Lifestyle data is a turning point in the industry, with a range of evidence supporting the many H&W benefits of participation in these programs demonstrating the value and the potential of continuing to incorporate H&W into insurance offerings and core business strategy. Encouraging customers to live healthier and rewarding them with discounted premiums or policy pricing that reflect their lifestyle, in turn, will lead to decreased claims in the future – everyone is a winner.