Towards the end of 2022, Evolution Partners focused on Health and Wellness, particularly where it applies to Financial Services (FS) firms, who we believe are well placed to use their unique positions to improve the Physical, Mental and Financial Health of their customers. This year, we expect Health and Wellness to become an increasingly important area across multiple sectors, but particularly in FS. In this article, we will cover five key trends that we expect to become increasingly prevalent in 2023 and beyond: these are data, engagement, personalisation, mental health, and financial health.
Historically, health insurance firms have generally considered surface-level data points, such as age, gender, address, pre-existing health conditions and whether an individual is a smoker, to determine products and pricing for customers. There is therefore an opportunity for FS firms to use the vast amount of data available, at an aggregate and individual level, to completely transform their customer interactions. There is real potential to achieve a win-win situation for both companies and consumers due to the detailed insights on individuals. This potential data can range from historical claims through customer purchasing patterns, all the way to current behaviours from phones and wearables (more on this in the next section).
There are understandable privacy and regulatory concerns associated with sharing personal data, but where consumers have the ownership and power to grant access to their own data, this should enable deep insights, which could then be used to calculate more accurate premiums, recommend or tailor products, or encourage specific behavioural changes that lead to healthier lifestyles. Other than regulation, there are still several key data challenges for organisations. For example, historic data could be unstructured and on legacy systems or may not be in an appropriate format to integrate easily with a Health and Wellness solution or platform.
There may also be significant gaps between the data a firm currently has or has access to versus the data they need to deliver on their Health & Wellness strategy. Given the increased popularity and sophistication of wearable devices, more detailed data collection is more achievable and attainable. Recently, there have been developments in this area where insurers have offered free or discounted wearables as part of their policies. Data from wearables allows insurers to stay updated on their customers’ health status and more importantly, alert them of any drastic changes in health status that may require immediate medical attention. Therefore, it is essential for firms in this space to perform a detailed data inventory and assess the gaps before developing a plan for how to address them.
The next trend we have identified is engagement with Health and Wellness platforms and solutions. This is an area where FS firms, and insurance firms particularly, have traditionally struggled. With health insurance, for example, most interactions with customers tend to be in negative or stressful situations. Via a Health and Wellness solution, there is an opportunity to change this. However, to increase interactivity, there must be a clear incentive for customers to engage. We have seen FS companies offer rewards in the form of discounts, cash back or free or discounted partnership products such as coffee or cinema tickets. These have had various levels of success but perks that reinforce or complement Health and Wellness are likely to embed behaviour and have a long-term positive impact on customers. Some examples that we have seen include discounted gym memberships, fitness classes, sports massages or meditation app access.
Another opportunity to improve engagement for health insurers is medication reminders and nudges. In the case of a health insurer owning their own healthcare provider networks, a Health and Wellness platform could provide medication reminders or recommendations, granted the customer allows access. For ongoing prescriptions, they could also assist with re-ordering medication or arrange follow up appointments, with options of digital and face-to-face to cater to the customer’s convenience. There are many potential benefits from increasing and improving engagement with customers but some examples of these are:
- Increased engagement leads to increased data (our previous trend), which can then lead to increased personalisation (see next trend). In fact, this engagement becomes the driving force for cross selling other potential products.
- Younger, healthier customers. Those who sign up to and use Health & Wellness platforms tend to be younger, healthier, and more active, which is likely to reduce the portfolio’s loss ratio over time
- Increased customer loyalty: the evidence indicates that those who are engaged regularly via a Health and Wellness solution are far less likely to allow their policies to lapse
- Non-customers can also be engaged on the platform, perhaps on a limited or short-term basis, with the opportunity to convert these into customers
Due to these potential benefits, we expect to see more efforts from FS firms to engage with their customers via Health and Wellness solutions in coming years.
Personalisation and Collaboration
Providing a more personalised experience for customers relies on insurance firms having access to data, as discussed above. However, personalisation can still occur to some extent with some simple initial data metrics such as age, gender, or location.
For example, the recommended exercise regime and associated benefits and rewards for a 25-year-old are likely to be different to those for a 65-year-old. Therefore, FS firms could provide broader, demographic based advice, plans and rewards initially. There is then the chance to further tailor the customer experience using platform, behaviour, and wearable data.
Further, it also widens the opportunity to collaborate with other partners to encourage healthy behaviour. For instance, a Health and Wellness platform could partner with a gym or personal trainer to create individualised training plans or provide access to classes that are automatically booked on confirmation from the customer. This could become possible when a customer discloses specific activity and time-of-day preferences on exercise based on their personal interests and schedule. Another opportunity for collaboration could be nutrition.
There are currently firms who offer simple, non-invasive home testing relating to detailed physical data points, such as gut health, blood fat and blood sugar responses. Access to this information would mean that Health and Wellness platforms could look to provide personalised, medically supported dietary recommendations. This may also link to other partners in the platform’s ecosystem helping to order recommended healthy foods and/or supplements. When information is readily available and accessible, customers will experience a completely personalised interface that simplifies the action of committing to a healthier lifestyle.
We have seen major improvements in our overall understanding of Mental Health and its links with both Financial and Physical Health, and we expect this trend to continue. In December 2022, we explored in our White Paper and S3E4 of our podcast, Evolutionary Exchanges how FS firms could use their unique positions to promote increased Mental Health and wellbeing among both employees and customers.
There are plenty of data indicating that during periods of poor mental health, people are susceptible to lose control of their finances. These financial struggles are also likely to further strain mental health, creating a seemingly unremitting cycle. In a recent survey, 67% of employees who had financial difficulties indicated at least one way in which they were suffering with their mental health. Furthermore, people with mental illness are six times more likely to face debt problems.
FS firms who wish to include mental health in their Health and Wellness approach could therefore implement some simple nudges to positively influence behaviour. For example, in a recent peer reviewed study of 2000 participants over the age of 65, those who took daily vitamin supplements saw a 60% slowing of cognitive decline. If research such as this becomes more widely understood and accepted byhealth experts, then firms could help to recommend and embed these healthy behaviours via their platform.
Furthermore, we have witnessed partnerships with meditation and mindfulness apps by health insurers. These tools are medically supported to improve mental health and treat symptoms associated with anxiety, stress, and depression. Some health insurers have also begun to offer mental health services as part of their corporate health insurance solutions, benefitting both employees by helping them to be healthier, and employers by reducing the number of sick days taken per year. The insurer themselves also stands to benefit since mental health offerings can serve as a differentiator and improve their reputation, while also potentially reducing claims.
Several recent studies have found that there is a clear link between physical, mental, and financial health. We have even seen some companies use credit scores as a proxy for financial health and begin to factor this into health insurance product and pricing decisions. We explored the topic of Financial Health in more detail in our White Paper and S3E3 of our podcast, Evolutionary Exchanges, in November. It is increasingly apparent that an overall view of Health & Wellness must consider all three of these pillars and that these should therefore factor into FS firms’ Health & Wellness strategies. Many individuals struggle to save enough for the long term, despite realising that they should, so FS firms have begun with helping to educate customers on how to save, as well as on how much.
When it comes to long term savings, we have also seen FS firms use this as an opportunity for potential cross-selling. Once consumers are educated on the importance of building wealth and made aware of the strong links to physical and mental health, we have seen some firms recommend appropriate savings or wealth products, whether directly or via their existing partnerships.
Opportunities for Expansion and Growth
We are confident that the Health and Wellness space will continue to grow and become a key strategic lever for FS firms. This year, we expect significant developments given the increased awareness of the mutual benefits for both companies and customers. If data, engagement, and personalisation are assessed, invested in, and implemented appropriately, they will create significant additional opportunities for expansion and growth. Additionally, with greater focus on both Mental and Financial Health, insurance firms are well-equipped to develop their reputations, while achieving substantial financial gains.