Boston, Massachusetts-based John Hancock Insurance was initially founded back during the Civil War era and named for the founding father known for signing the Declaration of Independence in a particularly showy style.
Those characteristics may not scream cutting edge, but recently the company (owned by Canadian insurer Manulife) has received attention for shaking up the traditionally staid life insurance industry with an innovative approach to actively supporting the long-term health and wellness of its beneficiaries.
In 2015, John Hancock started selling interactive life insurance policies pioneered by Vitality Group where rewards and premium discounts could be earned by healthy behaviors like reaching fitness goals, purchasing healthy food and getting regular health screenings.
Last year, the company made the decision to exclusively sell these types of policies and is currently in the process of switching their existing policyholders to the new model. An important point to note is that while the option for premium discounts or other financial rewards is available to all policy holders, the program itself is optional.
“It’s a program really designed around carrots, not sticks,” said John Hancock Insurance President and CEO Brooks Tingle. “Nothing bad happens if a customer doesn’t participate, but some really good things can happen if they do.”
Life insurance leaders like to tout the extended relationship that members have with their insurer – especially when compared to employer-based health insurance – as well as the financial alignment in helping their beneficiaries live longer lives.
Longer lives, the calculus goes, means more premiums and business for the insurer. For the most part though, life insurance still largely functions as a set-it-and-forget-it type financial product.
Tingle said by creating a program based on preventive health and accrued benefits and rewards, the company has been able to change the conversation with potential customers. It also increases the engagement and contact with customers from an annual privacy notice to more constant touchpoints about their health.
“Life insurance, despite the name, has really been death insurance,” Tingle said. “What our advisers tell us now is that instead of talking to their clients about death, they’re talking about living better and the discounts they can enjoy while they’re alive.”
There’s also additional business benefits in being able to create more efficient underwriting and creating a self selected lower-risk pool of healthier policyholders. Still, Tingle said the biggest value economically is in targeting less healthy customers with more potential to improve their health.
“If you follow our marketing dollars we’re actually targeting people squarely in the heart of America,” Tingle said. “This is all about from wherever you start, taking small, sustainable steps. We don’t need to turn everyone into a marathon runner.”
Beneficiaries have the option of choosing a basic Vitality program which offer limited rewards for healthy activities and a discount on fitness wearables, or a more intensive option called Vitality PLUS, which can be used to discount premiums up to 15 percent and can allow customers to defray the cost of an Apple Watch.
In a three-year validation study from RAND Europe, the latter program was able to lead to 34 percent sustained increases in activity levels, equivalent to nearly five extra days of activity a month. While “at-risk” participants were less likely to pick up the benefit, those who did showed greater improvements in activity than in other groups.
Tingle pointed to medical science’s greater emphasis on long-term health maintenance as well as the rise in consumer-focused connected devices as making this new model possible.
The program works on a system where healthy behaviors like meeting step count goals and buying healthy food earn points which can go toward premium discounts, as well as perks including gift cards and discounted hotel stays. One recent area of focus has been on promoting general mental health through meditation and better sleep.
A major lesson in actually promoting healthy behavior, according to Tingle, is the importance of removing as much friction as possible from the process. In the case of healthy food purchases for example, the company has partnered with Wal-Mart and NutriSavings to allow users to easily see food products that are eligible for discounts and reward points through an app or labeling.
When it comes to concerns about data security and privacy, Tingle said John Hancock has tried to clearly communicate the choice the customer has in sharing data, what the company is allowed to do with the information and the benefits policyholder receive from that exchange.
He also underscored the extensive underwriting process already present in the life insurance industry.
“Frankly this stream of information that people can choose to share after they become a customer is a really small subset of what they’ve already shared with us when they became a customer,” Tingle said.
“Most every focus group we’ve done care way more about ease of participation and convenience say with a wearable than the fact that we would know how many steps they took.”
Picture: Designer491, Getty Images