Next Big Thing in insurance: Digitalising Health
Wireless health-tracking has turned into a mega-trend. By 2020, analysts from the consultancy research2guidance expect the market for mobile health (mHealth) apps to grow more than 15% – up to US$31bn. According to new statistics from IT industry association BITKOM, one in three people in Germany now records health data digitally. Europe-based Capgemini says that on a global scale, the adoption of wearable fitness devices will likely grow from 13% to 20% of customers by 2020, and thinks every fifth consumer worldwide will use some kind of smart watch by then. Long-term, the consultancy giant sees the total addressable market at 44%-47%. Adidas sports app Runtastic alone is already used by some 80 million people in 20 countries across the globe.
“The new apps and wearables could be extremely useful,” stresses BITKOM chief Bernhard Rohleder. “They can help healthy people remain fit, and help patients recover faster.” According to a new analysis on the “Chances and Risks of Mobile Health Apps” (CHARISMHA), such programmes can help improve “health-conscious behaviour, adherence and compliance, thus resulting in a reduction of costs for healthcare in the long-term.”
According to the Capgemini analysts, mHealth app use is also the Next Big Thing in the insurance industry – and not only because they promise to enable insurance companies to understand a customer’s risk profile “at an earlier stage”, which is determined by genes, environment and lifestyle. The study also makes the point that “if customers are healthy, the claims from them will be greatly reduced”, which could “reduce the healthcare spend.” And mHealth data can “also reduce administrative costs of health insurers”, allowing them to “cross-sell specific insurance policies to customers based on their health data.”
The ‘shared benefit’ model
In 2014, Italian insurance major Generali took some of the industry’s first steps into the dawning mHealth age. The third largest private insurer in Europe (behind Germany’s Allianz AG and French AXA Group) had a premium income exceeding €74bn in 2015. It signed a contract with South African Discovery Ltd., whose co-founder and CEO Adrian Gore invented a shared-value insurance model dubbed ‘Vitality’ back in 1997. According to him, the concept is simple: “To help people improve health and wellness, and thereby prevent illness.” In brief, the idea is to provide incentives to both healthy and ill customers to modify unhealthy behaviour, which reduces the risk of illness overall. According to Gore, that’s good not just for the people in the scheme, but for his company and society as a whole.
As of January, Vitality had 4.8 million users through partnerships with major insurance companies in 14 countries. Discovery’s strategy is to expand Vitality’s reach through cooperation with big private insurance partners. So far, the company has partnered Vitality in Japan (to Sumitomo) in Australia and five other Asian countries, (through AIA Vitality), in the US (with John Hancock Vitality), in Canada (Manulife) and in China, where it holds a 25% stake in Ping An Health. In the UK, Discovery initially partnered with PruHealth in 2004 and PruProtect in 2007, but renamed the UK business VitalityHealth and VitalityLife after taking over in 2014. Its partnership with Trieste-based Generali is about to bring it to continental Europe.
Next stop: Europe
At the end of June 2016, Generali started the European roll-out of Generali-Vitality in Germany – its largest market in Europe, with an estimated 13.5 million customers and €17.8bn of premium income. The programme was launched in France in January, and this autumn it will kick off in Austria.
Giovanni Liverani, the CEO of Generali Germany, has said the insurer wants to fully capitalise on the new possibilities offered by digitalisation. Although Generali will at first only offer Vitality for its term life and occupational disability insurance products, the company has also confirmed that it will later include private health insurance and other products in its Vitality portfolio. “With Generali-Vitality, we basically want to go beyond the standard risk protection that we as an insurance company would normally offer,” says Simon Guest, CEO of Generali Vitality GmbH – the joint venture between Generali and Discovery.
Guest is responsible for developing, launching and managing the programme in Generali’s continental European markets. “Vitality helps people live healthier lives,” he told European Biotechnology, and said he expects the perceived added value through the insurer’s mHealth solution to significantly improve customer relationships and contribute to Generali’s ambitious expansion plans in Europe. But how exactly does that solution work?
Three vital steps
Generali says the voluntary programme incorporates three primary stages:
- Checking personal health and fitness level of customers and defining personal health goals: Results from a free fitness test come from a partner gym, which offers discounts for Vitality customers. These and results from a health check-up to determine the “Vitality Age” are digitally transmitted to Generali Vitality, which manages all customer data relating to the programme. Additional data on height, BMI, blood cholesterol & glucose levels, eating habits, sporting activities, test results on work-life balance and social interaction are also collected and collated. When this process is complete, the customer receives ‘bronze’ status. In the German retail market, this is linked respectively to a 7% or 10% discount for new customers on term life or occupation disability insurance premiums.
- Improving health: In the second step, customers are given recommendations on what could help them improve their health status, i.e. quitting smoking, shedding weight, going for regular medical checkups, engaging in more physical activity, consuming more fresh produce, etc. For every healthy choice they make, customers are awarded points. As an additional incentive, they can receive discounts on items and programmes offered by so-called ‘Vitality Partners’. In Germany, these include Garmin (fitness tracking devices), adidas (sports equipment), FitnessFirst, Weight Watchers and Expedia.
- Enjoy rewards: For every 15,000 points they collect, customers move to a new level – first silver, then gold and finally platinum status. These levels are also linked to certain benefits offered by Vitality Partners and further discounts on insurance premiums (in Germany, up to an 11% reduction in life insurance premiums and up to 16% less for occupation disability insurance).
According to Guest, the German retail market has so far reacted well to Generali’s new offer. Initially the insurer will only offer Vitality to new customers, but in the longer term it also wants to go after existing clients. “We’ve been live for seven months now, so it’s quite early, but we’re very happy with sales results and feeling very bullish,” says Guest. “We’re also happy about the way customers are engaging in the programme.” He says it’s still too early to give a statement about France, where a comprehensive Vitality programme kicked off on January 9th. But since the French market is almost completely corporate – with companies renewing employee subscriptions to insurance products annually – Guest is keen to learn about trends and differences.
Who controls my data?
Generali’s success in Germany so far was less predictable than you might think. Although the country has the highest density of fitness-app users in Europe, a YouGov survey indicates that 39% of them absolutely refuse to share health data with insurance companies. Their main concern is apparently that access would enable insurers to winnow good risks from bad, undermining the solidarity principle.
“Everybody has the right to live in an analog world.”
“Those who are healthy and fit are looking for discounts, but it’s easy to identify those who don’t participate,” criticises passionate triathlete and German Justice & Consumer Protection Minister Heiko Maas. “No one should be reduced to an algorithmic result.” He wants his ministry to see whether the use of some health data can be restricted.
Like Maas, critics from privacy and consumer protection groups are casting a wary eye on new developments. “It’s important to understand that Vitality is a programme for people who want to improve their health, and not only one for healthy people,” Guest says: “The more you progress, the more rewards we give. Our hope is that it contributes to a positive circle of behaviour – that you feel better due to lifestyle changes.” He disagrees with claims suggesting that the programme puts the principle of solidarity at risk by individualising premiums. “If we have people in the collective engaging to improve their health, that helps everyone in the collective,” he stresses. Giovanni Liverani adds that – at least for now – “we of course want to give incentives, but people who love leg of pork or don’t go jogging regularly won’t be paying higher premiums.”
Payers aren’t yet stepping up
Many experts believe that Generali Vitality heralds a new digital age in healthcare. Analysts from research2guidance even forecast that “mHealth apps will become an integrated part of the healthcare system.”
But so far, private insurance majors seem to be sceptical of Generali’s reward system. “We don’t track customer activities digitally or 24/7,” says an Allianz spokesman, adding that the company has no plans to introduce similar programmes. A spokesman from Ergo’s health insurance arm DKV says that although systems and self-auditing health behaviour with apps or fitbits “can support individuals as they adopt a healthier lifestyle … they wouldn’t transform calculation of premiums.”
Generali and partner Discovery – as well as competitors like Wellmo – beg to differ. “In the mid-term, this will become a market standard, and we will have a big competitive advantage,” believes Liverani. Finnish health app provider Wellmo, which claims to have “a combined base” of seven million clients, says that healthcare expenditure in Europe currently costs over €1tn, most of which goes through public or private health insurance – but that only 3–5% is being used for preventive services. “In the near future, the preventive digital health service market will be worth billions of euros in Europe,” predicts Wellmo Managing Director Jaakko Olkkonen.
Effective data protection laws
Statutory health insurance companies, which already offer bonus programmes that reward healthy lifestyle choices, are ambiguous about mHealth solutions. While German insurers like AOK Nordost, DKV and the Techniker Krankenkasse (TK) still reward health-conscious behaviour with subsidies for the purchase of smart watches, Germany’s second largest insurer Barmer withdrew its Fit2Go health app in 2015. “We continue to motivate clients and non-clients to increase their physical activity,” a spokesman told European Biotechnology. “However, we realised we can achieve that goal even without Fit2Go.” German data protection law currently blocks statutory health insurers from receiving customer motion data. Despite that, TK head Jens Baas continues to lobby for including mHealth data in electronic patient records. “We could inform about disease risks if we only had information on former diseases … for pooled analyses,” he believes.
Brussels-based NGO BEUC believes data protection related to mHealth solutions is still an issue. ”Fitness trackers that monitor and analyse every tiny aspect of our lives greatly challenge our fundamental rights to privacy and data protection,” says its Head of Food/Health Department Ilaria Passarani. Her organisation demands clear standards for quality and safety. In response, Generali manager Liverani says he can’t understand why people give personal data to companies like Google or Facebook, but distrust insurers that have been working in a highly regulated field for decades.
Performance principles: Does mHealth really improve health?
Internationally renowned sports medicine specialists like Ingo Froboese have also questioned the mHealth mantra. “It’s good if insurers sensitise customers to adopt a healthier lifestyle. But the problem is that even we don’t know which data is relevant. There’s no scientific basis to answer that question today, so it’s much too early for insurance companies to be funding fitbits.” Froboese says there’s currently still no evidence that insurers will save money by, for example, motivating customers to run more and farther. As long as it remains unclear whether they could pay for greater endurance or better cardio values with damage to knees or ankles, he recommends a prohibition on insurers promoting activity through tracking devices. Instead, he advocates health education based only on solidly founded research.
In mid-January, a report published at the World Economic Forum in Davos by Discovery’s Vitality Group provided long-term data involving health improvements of 100,000 Vitality members over five years. It concluded that the greatest improvements in health occurred among members who were the least physically active, and that incremental physical activity led to other lifestyle changes. “Leveraging principles of behavioural economics, including incentives and rewards, can activate people to change their health behaviours,” said Vitality Chief Health Officer Dr. Derek Yach. “Our study is the first of its kind to establish that increasing physical activity can trigger improvements in other health-promoting behaviours and overall health status.”
A long-term study on 55,000 participants conducted by a team of Danish researchers headed by Gorm Jensen, however, suggests that fitbit and smart watch junkies need to take care not to overdo it. The project showed that although joggers lowered risks of cardiovascular mortality over non-joggers by 30-45%, the greatest effects didn’t occur in the hares addicted to performance control and self-optimisation. That place was claimed by the slow but steady turtles in the group, who jogged 1-3 hours a week at a moderate pace – and who had no digital feedback whatsoever on their performance.
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