The mindset of the life insurance sector needs to shift from just paying out on claims to promoting healthier living to offset the social burden of increasing health costs, according to the head of a major life insurer.
AIA Group, Executive Director and Group Chief Executive and President, Mark Tucker said wellness had to be adopted by life insurers as part of their future focus instead of relying on the traditional business of paying out on mortality and morbidity claims.
“The psychology of the insurance industry has been that if you die or get in an accident – we pay.”
“The psychology of the insurance industry has been that if you die or get in an accident – we pay. The psychology needs to move towards that we are there to help you live longer, better and healthier lives, and that is a major change in psychology and direction but is significant as part of supporting the move to wellness,” Tucker said.
His comments were made as part of the first AIA Vitality Summit held in Sydney yesterday at which Tucker also stated that life insurers had a social responsibility to address issues around avoiding preventable claims due to poor health and lifestyle choices.
“Wellness is about the physical, the psychological, the environmental and the social – they are all different elements but are all equally important.” Tucker said.
“To be a healthier people means a longer life, less susceptibility to illness…it enhances productivity and on corporate basis there is reduced absenteeism, less time off and it comes down to less health care costs for government or they are moved into the private sector, which is a win- win-win model.”
Tucker also stated that insurers had the resources and timeframes to tackle issues around health and wellness and were better placed to do so than other parts of the financial services sector.
“The purpose of an organisation like ours is to help with social and economic development…”
“The purpose of an organisation like ours is to help with social and economic development, it is where we start. Insurance companies have a unique position in that respect, from our asset and liability side,” Tucker said.
“On the asset side we have ability to invest long term into the future and our liability profile is 25 to 50 years into the future. The asset management industry’s focus is 15-20 minutes, ours is 15-20 years. That is incredibly powerful and this is a material issue on the assets side. On the liability side we can take away the burdens of government, the aging burdens, the pensions, the health care costs.”
Tucker’s view was supported by Discovery Limited, Founder and Chief Executive Officer, Adrian Gore who has been involved in the development and roll-out of AIA’s Vitality program around the world.
Gore stated that while the financial services sector has monetized health it should be using those funds to create greater social and individual benefits for those willing to address their own health needs.
“The financial services sector monetises health, we take risks on mortality and morbidity and when people live longer or healthier the sector makes more money,” Gore said.
“However, our place is of shared value and we have social role to play using that surplus to fund incentives and get behaviour change. This transforms the industry from a transactional nature to one where we are using surplus to change behaviour which drives the surplus and creates a virtuous cycle.”
Nice words. As long as our underwriting practices continue to ‘reward’ new applicants with standard rates for ever higher BMIs – without any actuarial basis for doing so and against overwhelming evidence on the effects of obesity on both morbidity and mortality – we are a long way from ‘promoting’ wellness. Our version of a ‘sugar tax’ must be to charge the right premiums for obese and overweight insureds so we can continue to (i) incentivise the unhealthy to get healthy (and save money) and (ii) to reward the healthy by not increasing premiums due to too many claims from too-fat clients polluting the pool. Despite some advisers complaining about difficulty getting overweight clients through, the rest of you know it’s getting easier all the time and insurers are cowering under market share pressure. It’s all going to end in tears.
Insurance companies wanting the mindset to be a focus on wellness, rather than paying out on claims is all well and good. Commendable in fact. At the same time though, some (not the majority, thank goodness!) are making it more and more difficult to have genuine claims under income protection paid as easily and in-line with the definitions of the policy as they should be. Is this the reason for insurers wanting the focus to change?
These insurers are asking clients to undergo rehabilitation and re-training courses, even offering “business advice” to clients on ‘restructuring their business. Where in the policy document does it state that a client needs to take on-board these “suggestions?” Isn’t it up to the client’s own Medical Practitioners, who knows them best, to determine what is best for their patient?
Phone calls from Claims Officers suggesting this type of help, are not helpful at all, especially when made to people often struggling with the mental health issues ill health often bring on. Several times now in recent months I have had to contact insurers to say I believed they had over-stepped the mark in this regard.
Surely the better way would be for the Insurer to contact and discuss with the treating doctor whether or not rehabilitation funded by the insurer to help the client would be beneficial or not?
If millions of dollars are being spent on anti smoking campaigns (and some of them really are meant to frighten the smoker into quitting) are not working how is a 10% reduction in premiums and ” frequent flyer” style rewards going to work successfully I would like to know how the insurers campaigns are going ? I have not seen any figures to indicate its success ?
I admire the idea we all need to take better care of ourselves but most do listen to others if it effects there “good times” it’s the old same old It won’t happen to me
The campaign to date has shown a 40% reduction in lapse rates for a start. I have clients using the Vitality program who have are receiving financial incentives for short, medium and long terms goals. I think it is a great idea and their overall happiness levels with the health and their attitudes towards insurance have seen a real shift.
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