In the ever-evolving landscape of life insurance, Discovery Life uses a shared value insurance model to incentivise healthy living.

In the latest episode of “Life Behind the Numbers”, a Discovery Life podcast series, I sit down with Gareth Friedlander, Deputy Chief Executive of Discovery Life, and Daniel Stoch, Senior Manager of Market Analytics and R&D at Discovery Life, to delve into the intricacies of their shared value approach.

The shared value insurance model is built on the idea that healthier individuals claim less. Incentivising people to stay healthy not only benefits the insurer but also society as a whole, by reducing the general disease burden and increasing productivity.

Friedlander explains, “Insurance is the one industry in the world that can actually monetise behaviour change.” By encouraging policyholders to make healthier lifestyle choices, Discovery Life can reduce the present value of future expected claims, thereby releasing surplus assets that can be redistributed to clients.

One of the features of this model is the financial rewards for healthy behaviour. Policyholders can receive upfront discounts of up to 48% by linking their life insurance to their health and wellness status, such as their Discovery Vitality status or Discovery health plan.

Additionally, clients can earn up to 50% of their premiums back every five years through the payback benefit, with the potential to double this amount by deferring the payback.

The cash conversion benefit further enhances the model by allowing clients to turn their life cover into cash during retirement, based on their pre-retirement health and wellness engagement.

Stoch highlights the impact of these financial rewards: “For every R1 million we paid in claims, we paid R333,000 to clients for being healthy.” This trend is expected to accelerate, with projections indicating that in the next ten years, 50% of claim payments will go to clients for managing their health and wellness.

The episode also addresses the sustainability of the shared value insurance model, particularly for older clients.

Discovery Life has implemented mechanisms to ensure long-term engagement and premium affordability, such as the Vitality premium level, which flattens premium increases for older clients based on their engagement in the Vitality programme.

Another aspect discussed is the proactive claims initiative. By leveraging health data from Discovery Health, the insurer can identify potential claims before policyholders are even aware of them. Friedlander says the insurer has a client-centric approach where “We are looking and going out of our way to find claims to pay for clients.”

Friedlander and Stoch share their vision for the future of the shared value insurance model. With advancements in AI, big data, and wearable technology, the model is set to become more personalised and seamless, offering clients tailored incentives and a simpler user experience.

Life Behind the Numbers is a podcast series sponsored by Discovery Life, in which we delve into the trends driving insurance claims and explore how this data can help us improve health outcomes.