LF84 | With deep experience of Vitality's successful behavior change program, Candice is passionate about shared value insurance and shares a playbook of tips
Candice Smith has been deploying behavior change solutions internationally for over a decade. She spent ten years at Discovery Limited, South Africa’s largest health insurance company - including seven years as Deputy Head of Vitality Wellness. She then joined AIA Australia - the Vitality licensee in Australia - to lead their Wellness strategy.
During her time at Vitality, she gained experience building partnerships in a wide variety of cultures; for example in addition to Australia, she was involved in the Vitality roll out in China, The UK and Singapore. This profile is a result of several conversations with Candice over recent weeks, and dives into her experience as part of the key leadership team at Vitality, the concept of ‘shared value’ insurance, and her thoughts about future evolution in the space.
Vitality Wellness: the world’s leading behavior change program
Founded in 1992 as a medical insurer, Discovery is now one of South Africa’s largest and most diverse global financial services firms, with products around long- and short-term insurance, asset management, savings, investments, and employee benefits. Its flagship program, Vitality Wellness, supports both the health and life insurance products. It has now been licensed to 40 global markets, covers 30 million members globally (incidentally, about the same as the total number of Americans enrolled in one of 4,000 Medicare Advantage programs) and records 100m monthly customer interactions. It is comfortably the world’s largest behavior change engagement program.
The program continues to innovate and gain accolades, regularly being cited as ‘world changing’ (parent company Discovery has now appeared twice in a shaping the world list by Fortune Magazine), with its founder Adrian Gore rightly lionised as a transformational leader. A good overview (albeit from 8 years ago) is the Harvard Business School case study written about them.
At its essence, clients receive incentives and rewards to help guide healthy behaviors, healthy outcomes and saving for the insurance provider. The more things are done - screenings, cutting out smoking, eating healthy, going to the gym etc - the higher the tier status (see below) resulting in more benefits.
Using a foundation in behavioral science, the Vitality program addresses the three key areas that have the highest potential to improve health over the long term – nutrition, physical activity and preventive screening.
It operates a network of aligned partners to deliver rewards (such as supermarkets and gyms) and validate results (such as pharmacies) and has a tech platform accessible by the insurance company partners that ensures a consistent, joined up view of the customer.
Rooted in behavioral science - with some surprising insights
Vitality worked with academics including Kevin Volpp from the University of Pennsylvania / VAL Health, who pioneered some of the behavior change techniques such as 25% discounts on health foods and 75% discounts on gym memberships.
They also found some surprising insights, such as their ‘Healthier by Pre-Commitment’ initiative. This offered customers the option to commit to improving their “Rate your Basket” score - a measure of how healthy their weekly grocery shop. All it offered was the chance to not lose their 25% discount; if they failed they lost their benefit. Despite seeming to offer only a downside for participating, the team found that people innately want to be better, and are willing to create external barriers to keep them on track.
Pioneering the concept of ‘shared value’ in insurance and beyond
‘Shared value’ is about recognizing it’s possible for both customers and partners to benefit. It is “a framework designed to create business solutions to social and environmental problems. Put differently, it’s a means to deliver on your purpose, profitably.”
Shared value is not about superficial feel-good, CSR, marketing efforts. It’s about aligning stakeholders so all benefit. It is similar to the Japanese concept of sanpo yoshi, which suggests that every transaction needs to benefit the buyer, the seller, and society.
In the insurance world, it’s about rejecting the old model of passive insurance that waits for bad things to happen. Instead, it’s about working with customers to prevent bad things from happening in the first place, benefiting both customers and company. It’s relevant to multiple areas of insurance -for example it’s now being rolled out to deliver incentives to drive safely or lower your risk of fire or flood damage.
Discovery was the pioneer of shared value insurance in the health space, arguably its most important application. This article in Forbes points out its transformational potential in insurance and applicability to many other areas of insurance, enabled by new personalized digital technologies and services.
The why… an impact on health outcomes and costs
Behavior change matters because it’s relatively easy to connect lifestyle choices with disease burden - the top four lifestyle choices (physical activity, diet, smoking and alcohol) drive four chronic conditions (heart disease, cancer, diabetes, and respiratory disease) which are collectively responsible for 60% of preventable deaths worldwide, according Oxford Health Alliance data.
Vitality data indicate the direct link between program engagement and better health outcomes. Engaged customers saw 40% lower mortality rates and up to 17% lower healthcare costs. Employers meanwhile, benefitted from a 46% reduction in sick days and productivity increases of up to seven days a month.
Partner network case study: supermarket integration
Discovery is sufficiently large in South Africa it was able to forge a partnership with the two largest supermarket chains there to have individual level health scores for each SKU, and have an icon representing a healthy choice displayed on the shelves next to the products and on the customer’s receipt. Here a key incentive in the program was providing a hefty 25% cash back on healthier products, which was then automatically paid into a customer’s nominated bank account at the end of each month. Interestingly, making it more obvious which foods were healthy resulted in behavior change impacts beyond those members (who received direct financial benefits) into the wider community, suggesting that governments look into this. (Maybe Australia’s Health Star rating should incorporate rewards too?)
The Vitality team extended its influence to engage with food manufacturers around reformulation of some of their product lines to reduce sugar, sodium and unhealthy fats and worked with government and policy makers to lobby for a sugar tax in South Africa.
Spotlight: ‘Dynamic underwriting’
Discovery was one of the first insurers to develop ‘dynamic underwriting’ for the life insurance sector. This essentially means rather than a one-and-done life insurance premium calculated on sign up, the premium can go down (not up) if the client engages in the Vitality programme and participates in healthy behaviors that lower risk. Most countries don’t allow dynamic underwriting in health insurance, so it’s focused on life insurance. The required elements include:
Usage-based pricing: discounts and rewards for healthy activities
Continuous underwriting: ongoing risk monitoring and premium adjustments
Multiple data sources: personalized insights from trackers, shopping, health data…
Digital: analytics and AI used to calculate customizable premiums and rewards
Rolling out with exclusive partners in each country
Vitality Wellness forged exclusive partnerships with some of the world’s largest insurers globally, including John Hancock (USA), Generali (Italy, France, Germany), AIA (APAC), Sumitomo (Japan) and Manulife (Canada). This model helps those insurance partners with access to world class, scientifically-proven insights and academic rigor, access to 50m life years worth of data, as well as the credibility of working with a global program.
A 10-point plan
Vitality has been doing an incredible job at changing behavior and delivering impact, but it’s still only scratching the surface. Globally, healthy lifespan is not improving - people are living longer, but sicker, lives. The economic and social implications of a healthy aging population are profound, not just for health costs but for economic development and even global security; Peter Zeihan among others has predicted that demographic challenges could spark global instability. We may be winning a few battles but we’re losing the war.
Candice’s shared her top 10 takeaways, a ‘playbook’ if you like, for changing population health at scale:
Embrace ‘shared value’. Traditional health and life insurance is archaic; the industry needs to shift to health prevention and promotion. This is not just the right thing to do, but will result in a more profitable business.
Aim for scale. Currently Vitality partners with just one health insurance company per country, meaning most people don’t have access. Let’s make this kind of program available to everyone in a city, State or country… (Editor: Here’s looking at you, Blue Zones….]
Reward emotional & financial health. While the pillars of Vitality’s program - nutrition, physical activity, smoking cessation and health screening - go a long way to drive outcomes, we also need programs delivering robust mental, emotional, spiritual and financial health.
Engage local politicians. To change the system we need to work with the political leaders to have access to policies, education, public transport, housing and more. ‘Health in all policies’ is a good starting point for this.
Prioritize behavior change. Behavior change is critically important, and extremely complex to change sustainably. Customers and employees are humans first and foremost, and the science of behavior change can apply to both customer engagement and staff performance.
Remove friction. A seamless user experience is key. When Vitality first started, members had to take their pedometer to the pharmacy to validate their steps. Now ubiquitous wearables makes this easier, but still not trivial.
Create a single view of the customer. Many insurance companies are still stuck in traditional silos of health insurance or life insurance. Discovery integrated this from the start, but it’s still the exception not the rule.
Deep partner integration. Back end integration - ecosystem. Line item purchasing data for every sale. Every gym visit.
Actionable insights, not just data. There’s so much data available now, the key is not information or data access but providing contextually relevant and timely, actionable insights based on that data. A nudge at the right time is worth millions.
Iterate & learn. There’s a need to vary program offers and vary the partner ecosystem and campaigns in response to changing feedback, consumer needs and the market. This also relates to the need to continually and reassess the ROI of experiments.
It’s hard not to be impressed by the enthusiasm and conviction with which Candice discusses the history and future of behavior change. The results speak for themselves, and an invitation for other businesses to apply relevant insights to their markets. One thing that’s clear is that Discovery is not sitting on its laurels with Vitality, but working hard to constantly iterate and improve it, based on data.
The South African Discovery HQ works on an annual innovation cycle; every September every business unit needs to launch to the market new products and services. The relentless pursuit of innovation is also demonstrated by its Inspiring Excellence programme which offers employees a chance to win a RAND 1m ($50k USD) innovation prize for creating a viable new product idea (this is how the dynamic underwriting product was developed).
In addition to the potential impact on population health of the shared value approach, this company-wide commitment to innovation is something many organizations in the space would do well to learn from.
Change AGEnt profile: Candice Smith
Amazing write up! And we are lucky to have Candice in Melbourne helping to push the envelope here.
Very interesting to learn that Vitality came out of a corporate innovation program. I'd love to learn more about that.