Providing incentives for people to live longer and healthier lives is not only a timely response to the growing interest in wellness, but also makes good business sense for a life insurer, say executives of AIA, where the Vitality programme is now a cornerstone of its business.
"We want to focus on living. We want to focus on the here, the now and the tomorrow while our customer can have a relationship with us, so the emphasis is on building relationships through the whole life journey of our customer, not just end of life and the beneficiary," said Stuart Spencer, the Hong Kong-based insurer's chief marketing officer.
"Lifestyle diseases are now an epidemic in Asia and we recognise that over time, if trends don't change, if behaviour doesn't change, if the way people take care of themselves doesn't change, then the entire industry is in trouble and those insurers who don't recognise that, will eventually recognise it."
Changing behaviour to reduce the prevalence of diabetes, hypertension and chronic heart disease is not only in the interest of life insurers but also benefits society by reducing the economic impact of treatment costs.
According to research by AIA, Asia Pacific companies lose an average of 59.6 days of productivity per year from people not coming to work because they are sick, or coming to work while sick, said Christian Wards, director of Group Healthcare at AIA. The figure is nearly double the 30.4 days reported in the United Kingdom.
The core proposition of the Vitality programme is based on wellness: if you stop smoking and eat less fatty and spicy food and reduce other risky behaviours, your premiums can actually go down.
"It is simple and it is highly effective in changing behaviour, where if you improve your health, you will be rewarded," said Mr Spencer.
"For example, if you lower your bad cholesterol and your weight or improve your body mass and blood pressure, year over year, we will raise your sum assured because you are less risky than you were a year ago, and we will reward you by reducing your premium."
There are also other rewards such as discounts on gym memberships, travel rewards, and discounts on organic and healthy food at supermarkets. Customers are given "engagement tools" to record and measure their health and lifestyle behaviour, and the information provides more data that can be used to refine the programme.
"By enriching and using our data, those insights enable us to very have clear attitudinal and behavioural segments to understand who our customers are. Once we have clear segmentation, then we can align the right proposition at the right time that makes sense," Mr Spencer said.
Some of the products the company has come up with include a food safety insurance programme in Vietnam and AIA Diabetes Care insurance in Singapore.
AIA research found out that people with diabetes find it hard to get health coverage in Singapore, where the prevalence of diabetes as a percentage of the population is second highest among developed countries, according to the International Diabetes Federation. The insurance plan provides coverage for key diabetes-related conditions and through AIA Vitality, customers will also be rewarded for each healthy choice they make.
The Vitality programme is now on offer in 10 of the company's 18 markets in Asia and should be available universally within two years. Brand ambassador David Beckham is helping to promote the new branding effort, along with Tottenham Hotspur Football Club.
AIA is also transforming its business in other ways. In response to the digital revolution, the company is aiming to become paperless within five years and says that 67% of its business is already fully digital.
Cambodia was chosen to be at the forefront of the digital endeavour because the market is less complicated in terms of regulation and the insurance industry is relatively young there. Consequently, the company decided to launch the business there in a completely different way, said Bill Lisle, AIA's regional chief executive.
"Our business there is totally paperless. Signing the application form is now done biometrically and paying claims is also digitised," he told Asia Focus.
"We took that opportunity because when we look at Cambodia, 50% of its 16 million population is on social media. We launched our business on social media, which managed to get 5 million hits on Facebook on the first weekend that we launched."
It took the company two years to do all the research and due diligence before it launched in Cambodia, where it decided on a fully digitally enabled operation right away.
"The normal process we go through is to set up a representative office to understand the environment before you end up getting a full licence, and that is what we have done in Myanmar," said Mr Lisle. "But its government has yet to give out any international licences and we are hopeful that it is progressing, but the reality is we have to respect the regulator and the rule of engagement.
"We are in the pole position to be able to get a licence from Myanmar which is a very exciting opportunity along with a well-publicised challenges because of the 50 million-plus population but still very early in the evolution of financial services."
While AIA wants all of its businesses to be paperless, the transformation was relatively easy in Cambodia because there was no legacy to manage. In some markets, regulations still require paper applications to be signed.
The second element of the transformation involves digitising distribution through its interactive Point of Sale (iPoS) system, a tablet application containing everything an agent needs to sell a policy, and the interactive Mobile Office (iMO) platform for sales managers.
"By using something that is visual like a tablet, it is easier for our customers to understand what they are buying and easier for them to buy because they do not have to fill out 75 different papers and sign 20 times to buy something," said Mr Lisle.
The third digital horizon involves making more complicated insurance products easier to understand, offering lower premiums and higher perceived value, and using a digital interface to assist in more complicated sales by agents and regional managers.
"If you plot these horizons into our 18 markets, we are all in different stages but our intention, over the next five years, is to try and complete all of the horizons for all of our markets," Mr Lisle said.
AIA continues to expand its physical reach as well. Last month it acquired the life insurance business of Commonwealth Bank of Australia for A$3.8 billion (US$2.98 billion), which will make it the largest life insurer in both Australia and New Zealand.
And while some observers believe that insurers, like many other financial services providers, will have to become fully fledged financial technology (fintech) players to stay relevant, Mr Lisle disagrees. Fintech businesses, he notes, "do not have very big distribution" and despite all the hype, AIA does not see any big fintech success stories globally.
"Fintech companies are trying to acquire data but we already have the data," he said. "We have close to 50 million customers across the group in our life and corporate solutions businesses and we have close to 100 million customers through our bank partners, so collecting data is not our key issue.
"Accessing the data or accessing potential customers is our objective."
