By Jaco Oosthuizen, Co-Founder and Chief Insurance Officer, YuLife
In recent years, a growing number of organisations have turned to employee wellness programmes – including gym memberships, health classes, fitness apps, and the like – to incentivise healthier living and attract top talent. According to Deloitte, the corporate wellness market is slated to reach $11.3 billion in the United States alone by 2021. But with many employers facing a financial crunch and forced to cut costs amid a global economic downturn, this looks set to change. As more employers cut back on perks and “nice-to-haves” in favour of focusing on essential services, how can they encourage their employees to lead healthier, more resilient lives?
While many organizations provide their employees group life insurance as a benefit, it’s been an underutilised tool in promoting employee wellbeing. Once an employee is enrolled in a policy, they’re unlikely to have any further contact points with the insurer – until a loved one makes a claim on their behalf. To put it bluntly, life insurance as we’ve long known it has had a great deal more to do with death than with life.
Rethinking the future of life insurance
If life insurers are to add value to policyholders’ lives, beyond the assurance of some financial security for their families after they die, then they must engage policyholders throughout their lives with an eye towards promoting healthier behaviour.
Indeed, life insurance is on the cusp of a transformation from focusing primarily on claims-handling to acting as a client-centric, needs-driven partner with multiple policyholder contact points.
To successfully achieve this transformation, the sector should draw on the examples of some of the most popular platforms and services on offer today. What keeps users coming back to Amazon, Facebook, Netflix, and Spotify, to name but a few? It’s not just that there’s widespread demand for efficient e-commerce deliveries, social networking, and good content to stream. At the root of these platforms’ success is something deeper: an intimate understanding of their users’ interests and behaviour. Armed with these insights, they direct users toward the most relevant and engaging products, information, digital communities, and content, continuously learning from users’ behaviour to more effectively engage them.
How, then, can life insurers apply this lesson?
Prioritising wellbeing
For decades, life insurers have operated according to the same basic model, determining policy costs according to a very limited set of criteria: age, smoker status, medical history. But this model doesn’t take into account policyholders’ day-to-day behaviours and habits – despite a wealth of data insurers can harness to do just that.
Risk selection and pricing are vital to insurance, but insurers should move towards a model that emphasises risk prevention and ongoing management. They can do so thanks to sophisticated advances in artificial intelligence and data analytics, which can enable insurers to reimagine life insurance and more dynamically assess and price risk based on new sources of data.
Wearable fitness trackers, gym check-ins, participation in nutrition and wellness courses, and more offer crucial insights into employee wellbeing. By making use of such data in policy underwriting, life insurers can incentivise healthier behaviours and nudge policyholders to make smarter choices about health, diet, and exercise. When the payoff is both better health and lower premiums, employees stand to reap big rewards.
It’s not just employees who have a stake in this: A healthier workforce is a happier and more productive one. Once life insurance is understood as a service which offers added value in the workplace every single day, more and more employers – especially small businesses which otherwise wouldn’t have considered providing group life insurance – will feel more comfortable in offering their staff insurance policies which protect their loved ones.
As the globe grapples with its most serious public health challenge in a century, entire industries are re-evaluating their business models and envisioning how to build more innovative and resilient ones. It’s time for life insurers to meet the moment.
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