A radical move by one of the biggest life insurers in North America has experts questioning whether the company could reshape the model for the industry ‚ÄĒ by building business around helping its customers live longer.
In September, insurance company John Hancock announced it will include its Vitality health incentive program, which customers had to opt into in the past, in all its policies from here on out. Policyholders can share personal health information, like their daily diet and data from fitness trackers, and be rewarded for healthy lifestyle choices through prizes and lower premiums.
In some ways, life insurance is an inherently morbid industry, as it requires its customers to prepare for their deaths. But by writing the Vitality program into all its policies, John Hancock is trying to refocus its business model around helping people live longer, healthier lives, the company said. It sounds altruistic, but the benefit is mutual ‚ÄĒ the longer its customers live, the more money the company makes, as it will gain more premiums over time and pay out end-of-life claims less frequently.
‚ÄúLife insurance is still one of those products that you buy and then sit it on a shelf somewhere and really don‚Äôt think about it again,‚ÄĚ said Brooks Tingle, president and chief executive of John Hancock Insurance. ‚ÄúBut we‚Äôre changing this business from one that was barely part of our customers’ lives other than peace of mind to one where we‚Äôre very present in their lives.‚ÄĚ
Some experts are predicting it will set the standard for the future of the insurance industry, by making insurance about positive, daily engagements instead of just worst-case scenarios. But the avalanche of personal data makes the company ‚ÄĒ and its customers ‚ÄĒ vulnerable to a new host of threats, and it has sparked Big Brother comparisons.
The Vitality program gambles on the popularity of rewards-based consumption, which can be hit or miss, according to Yuping Liu-Thompkins, who researches marketing at Old Dominion University. Often, Liu-Thompkins said, rewards programs mostly appeal to people who are already prone to the good behavior they‚Äôre being rewarded for, as opposed to changing their habits long term.
‚ÄúWhen people first join a reward program, often they‚Äôll be somewhat conscious and might modify their behavior. But after awhile, sometimes the novelty effect wears off, and they‚Äôll go back to doing what they normally do,‚ÄĚ Liu-Thompkins said.
The auto insurance industry has been betting on the efficacy of rewards programs for a while, through the use of telematics ‚ÄĒ apps or devices that track driving behavior for auto insurance companies and reward drivers for safer driving through reduc