When John Hancock Insurance partnered with Vitality last year to introduce a life insurance product that rewards policyholders for healthy living, it wasn’t a new concept.
The company creatively borrowed an idea that has thrived in other parts of the world for many years. For example, Discovery Life became wildly successful selling health insurance to South Africans on a wellness concept.
People earn points for healthy activities, which translate to rewards and premium discounts. Discovery Life and Vitality are both parts of founder Adrian Gore’s business empire.
“These are products that put the interests of both the carrier and the consumer in alignment,” said Eric Sondergeld, corporate vice president, strategic and technology research for LIMRA.
“They’re helping people live a better life. If you can exercise more, live better and all these other things, you’re going to live a longer and a better life, and they’re going to get a better risk.”
Sondergeld is leading a breakout session today at LIMRA’s 2016 Life Insurance Conference in Las Vegas. He will speak on product and distribution innovations happening in other countries.
North American carriers such as John Hancock need to try new things in an effort to reverse disturbing trends. Sales of individual life insurance policies are down 45 percent since the mid-1980s, LIMRA reports. Roughly 30 percent of American households have no life insurance at all, compared with 19 percent having no life insurance about 30 years ago.
Some carriers are welcoming new tactics. MetLife, for instance, set up Walmart kiosks last year in a pilot program to sell insurance policies to retail shoppers.
“MetLife is probably getting a lot of really good intelligence and learning from what they did in those couple of states,” Sondergeld said.
‘Very Mature’ Industries
U.S. and Canadian insurance industries are “very mature,” he said, with highly evolved concepts and business practices. But there’s a danger in having the mindset that you have nothing new to learn, Sondergeld added.
“Most other insurance markets around the world have actually followed a similar development pattern to how our industry developed here,” he said. “That doesn’t mean innovation isn’t happening in those other places and we that shouldn’t pay attention.”
Sondergeld promised his conference presentation would give “a whirlwind tour” of product and distribution channel options from around the world.
“There are a lot of things going on outside this country that (insurance companies) could learn from,” he said.
Vitality, for one, is selling its wellness insurance combination products in more than a dozen countries.
With the John Hancock program, clients immediately begin accumulating "Vitality Points" after their policy is issued and when they complete health-related activities such as exercising, undergoing an annual health screening or even getting a flu shot.
The policyholder earns “Vitality Points” that can be swapped for premium discounts, or things such as travel or Amazon gift cards. Health goals are emphasized and John Hancock gives every new policyholder a free Fitbit device.
Simplified Life with Vitality is currently available in 34 states. A 45-year-old couple each buying $500,000 universal life policies could save about $25,000 on their premiums to age 85 if they maximize Vitality health benchmarks, John Hancock said.
“I kind of think of these types of products as the next generation of product maturity,” Sondergeld said. “And I think we’re just seeing the beginning of that.”
Creativity from other cultures is not limited to the product side. Foreign insurance executives are pushing several retail distribution models that make MetLife’s Walmart venture tame by comparison.
In Japan, “insurance shops” are regular retailers in malls, selling policies from several different carriers. In Latin America, it isn’t unusual to find a cell phone carrier that also sells insurance.
Likewise, a prominent Japanese furniture chain sells insurance in its stores.
“The idea there is to catch people when they’re having life events – when you get married or you have children,” Sondergeld said. “These are all times when you tend to buy furniture.”
There are significant differences in how companies market and advertise their products in other countries. Cultural expectations shape how insurance is portrayed, Sondergeld said.
“In some Asian countries, for example, TV commercials about insurance are extremely emotional and graphic,” he explained. “They really try to tug on your heartstrings.”
The bottom line is these creative product and distribution models are working. Japan is “a very saturated market” with very high insurance ownership, Sondergeld said.
That makes these ideas worth paying attention to, he added.
“The other thing I’m going to be suggesting companies do is to try new things and be willing to fail,” he said. “That’s what innovation is all about. That’s how industries, companies and markets can progress.”
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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