Cash back, discounts and other rewards offer insurance customers incentives for healthy behaviors.

In my last post, I talked about meeting the needs of banking customers with living services. Today, I’ll examine how living services can be used by insurers.

First let’s look at health insurance. In today’s world, health is the new wealth. It’s no longer a complex cost managed by a closed set of entrenched players. Now it’s something we can all keep track of, learn from and reward. For insurers, measuring wellness has opened a new avenue for interacting with customers, gaining loyalty and minimizing risk.

Some health insurers have already begun to take advantage of this new approach. John Hancock, for example, an American insurance firm, created an Apple Watch app which allows customers to record their activities and earn up to a 15 percent discount on their annual premium based on healthy patterns of behavior.

Similarly, Vitality by Discovery is a program that offers members discounts and cash back if they behave in a healthy way. Some of the customer benefits are:

  • Nutrition: Cash back on healthy food and discounts for joining Weight Watchers or Weigh-Less.
  • Exercise: Cash back on healthy gear and up to 100 percent off monthly gym fees with Vitality Active Rewards.
  • Preventive care: Cash back on healthy care items and savings on stopping smoking.
  • Travel: Savings on local and international flights, local car hire and accommodation, and cash back on holiday packages.
  • Leisure: Discounts for movies or concert events, and discounts on a range of local magazines and newspapers on discovery/mall.
  • Shopping: Cash back in the Discovery Card store network.

The Oscar health insurance company gives customers a free Misfit device and offers users a $1 credit every time they hit their step goal, with rewards in Amazon vouchers of up to $240 a year. Not only do rewards decrease premiums for customers, they also generate loyalty and commitment to the provider.

In Australia, Medibank (a health insurer) and flybuys (a loyalty program) give customers points for providing their fitness data and for making healthy decisions. The partnership explicitly suggests the use of a tracker. Notably, flybuys links a major retailer, a telecommunications company and an airline, and others.

P&C insurers are also beginning to add living services to their portfolios, personalizing customer interactions based on customers’ personal timelines: past, present and future. In insurance, rectifying the past with financial compensation has largely been the core of the business. A major shift now underway is for insurance companies to contact customers during incidents—from car accidents to burst water pipes—to help them sort out their problems now rather than later. Living services are also shifting the insurance industry’s focus to the future, with insurers using data analytics to predict risk.

In my next post, I’ll dive deeper into the ways that living services and the Internet of Things are creating both opportunities and threats for financial services institutions.

In the meantime, to learn more, visit Beyond the Everyday Bank.

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