Introducing ‘Pay As You Live’ (PAYL) InsuranceInsurance that rewards a healthier lifestyleAugust 2015

“Those who think they have not time for bodily exercise will sooner or later have to find time for illness.”Edward Stanley (British Statesman)

2 Introducing ‘Pay As You Live’ (PAYL) Insurance

W e are all leading b usier liv es. I n betw een j uggling family,

ro e on l n other co t ent o t o u re fin ng le t e

to ocu on our el e n our ow n personal w ellbeing.

h eh our contr ut ng to the u t ne ncre e n chron c re ent le e e h ch nnu lly contr ute to o e th glo lly

t eg the ue t on o l e n he lth n urer h e role to l y n hel ng the r cu to er re uce the r o chron c e e o ght n urer cre te ro uct th t ro ct ely encour ge n re r he lth er l ng

or ye r or r th n ng n urer h e conce tu l e y ou e n ur nce th t u ge e n ur nce te hel ng

turn th conce t nto re l ty

K ey q uestion f or in surers:

o to hel re uce re ent le e e th

cu to er n the ro er co un ty h le ro ng long ter rofit l ty

F ig ure 1 nnu l ort l ty r te

ro hron c e e

38 mil l ion p eop l e e ro chron c e e nnu lly

• ll on e th are tob a cco rel a ted

• ll on e th re c u e y insufficient p h y sica l a ctiv ity

• ll on e th re c u e y h a rmf ul drin k in g

• ll on c r o cul r e th re c u e ro

ex cess sa l t in ta k e

r o cul r e e ncer hron c re r tory e e ete

3

K ey q uestion f or in surers:

o to cre te co et t e nt ge through leveraging

g t l technology

T ren ds crea tin g op p ortun ities in P a y A s Y ou L iv e in sura n ce

G row th of p rev en ta b l e l if esty l e disea seshron c e e re e ecte to ccount or uch o ll e th y l o re erre to l e tyle e e they nclu e

ty e t o ete c r o cul r e e c ncer n lung e e lthough genet c n en ron ent l ctor l y role controll le eh our uch o ng et e erc e lee ng ttern n tre re the o t gn fic nt c u e

n other or the or ty o the e e e c n e re ente y le ng he lth er l e tyle he orl e lth rg n t on ugge t th t the r o uch e e c n y re uce y u to n ult rt c te n n u o nute o o er te

nten ty ero c ct ty throughout the ee u t o er nute o e erc e er y

P oten tia l f or dig ita l tech n ol og y to imp rov e h ea l th outcomesth ll on nternet re y rt hone lre y n e tence

the e r le fitne tr c er r et et to eco e ll on n u try y he e e ce re lre y hel ng ll on o eo le co t l e tyle e e through the l e o e ore

th n ll on u er n the nute or out ore th n ll on n t ll e lth n fitne re the te t gro ng

c tegory on une n n ro

h co ne th the o t on o onl ne oc l net or ng n he lthc re g e n urer cce to n un rece ente ount o t n n ght nto cu to er eh or e er ge correctly th ll n or re u r c ng n unloc ne lue or n urer cu to er n the ro er co un ty

F ig ure 2on erg ng ru t e nno t on tren

T h e in tern et of ev ery th in g

connected dev ices b y 2 0 1 8

$ 8 b n

H ea l th a p p l ica tion s

li tions e i te to e lt n fitness

N ik e+ u er

7 M in ute W ork out o nlo

1 0 0 , 0 0 0 +

W ea ra b l e dev ices

industry b y 2 0 1 8$ 3 0 b n

S ocia l media & on l in e commun ities

M essa g e b oa rds & b l og s

S ocia l n etw ork s

“ Breaks dow n the w alls of patient- prov ider communication”

Statistics have been sourced from: http://www.who.int/mediacentre/factsheets/fs355/en/EY Digital Sate of the Nation, Digitaltrends.com, PHA Australia

4 I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance

Disin teg ra tin g customer l oy a l tyn ng ro recent lo l u to er n ur nce ur ey gure h ghl ght

the n u try gro ng ro le th con u er rel t on h ru t ll ng tch ng on the r e ty e olut on ll l y n ort nt role n hel ng

n urer to u l ore e n ng ul n t c er rel t on h th the r cu to er

F ig ure 3 lo l u to er n ur nce ur ey fin ng n ght n con er t on

K ey q uestion f or in surers:

o to ttr ct ee en n ret n cu to er

to r e gre ter lue ro ne n e t ng

rel t on h

o re uce ttr t on n ncre e

engagement insurers ca n l ev era g e tech n ol og y a n d da ta to erent te on e er ence n

r ce ncre ng the erce e lue of their offerings.

2 7 %

4 3 %

3 0 %

4 0 %

3 4 %

2 6 %

5 0 %Cost/ terms

4 7 %3 8 %

2 8 %2 8 %

2 6 %

G l ob a l l if e

2 5 %2 4 %2 4 %2 2 %

2 0 %

5 7 %4 2 %

2 9 %1 6 %

2 6 %1 4 %

2 0 %1 1 %

1 7 %1 8 %1 7 %

5 9 %4 8 %

3 9 %3 4 %

3 1 %2 6 %3 0 %

2 5 %2 9 %

2 6 %2 6 %

ol cy enefit co er geR ecommended by broker, friends

re uency rele nce o co un c t one el o er ce rece e

ol cy not l gn to y l e c rcu t ncee e rch con ucte

er ence er on l ly le toner n re ut t on

not l e the y cl h n leu to er loy lty enefit

G l ob a l a uto G l ob a l h ome

A dv oca cyel hoo to reco en

ore th n once ye r nce ye r or le e er

Current Preferred Current Preferred Current Preferred

1 0 %

6 7 %

2 3 %

1 8 %

5 6 %

2 6 %

9 %

6 8 %

2 3 %

1 7 %

4 5 %

3 8 %

9 %

6 1 %

3 0 %

1 8 %

5 5 %

2 7 %

G l ob a l dev el op in g ma rk ets

Att

riti

onlo

e

ol

cy n

the

lt

on

th

3 8 %3 8 %3 7 %

5 9 %5 8 %

V ery L ikely

L ikely

eutr l

U nlikely

V ery unlikely

0 % 2 5 % 5 0 % 7 5 %

T ota l

Preferred Current Preferred Current Preferred

4 4 %

2 9 %

2 7 %

2 4 %

4 5 %

3 1 %

2 7 %

2 7 %

4 6 %

1 3 %

4 3 %

4 4 %

Policy u te

ec l e lpromotions

G l ob a l ma ture ma rk ets

ener ln or t on

Policy u te

ec l e lpromotions

ener ln or t on

Current

2 7 %

4 3 %

3 0 %

4 0 %

3 4 %

2 6 %

5 0 %Cost/ terms

4 7 %3 8 %

2 8 %2 8 %

2 6 %

G l ob a l l if e

2 5 %2 4 %2 4 %2 2 %

2 0 %

5 7 %4 2 %

2 9 %1 6 %

2 6 %1 4 %

2 0 %1 1 %

1 7 %1 8 %1 7 %

5 9 %4 8 %

3 9 %3 4 %

3 1 %2 6 %3 0 %

2 5 %2 9 %

2 6 %2 6 %

ol cy enefit co er geR ecommended by broker, friends

re uency rele nce o co un c t one el o er ce rece e

ol cy not l gn to y l e c rcu t ncee e rch con ucte

er ence er on l ly le toner n re ut t on

not l e the y cl h n leu to er loy lty enefit

G l ob a l a uto G l ob a l h ome

A dv oca cyel hoo to reco en

ore th n once ye r nce ye r or le e er

Current Preferred Current Preferred Current Preferred

1 0 %

6 7 %

2 3 %

1 8 %

5 6 %

2 6 %

9 %

6 8 %

2 3 %

1 7 %

4 5 %

3 8 %

9 %

6 1 %

3 0 %

1 8 %

5 5 %

2 7 %

G l ob a l dev el op in g ma rk ets

Att

riti

onlo

e

ol

cy n

the

lt

on

th

3 8 %3 8 %3 7 %

5 9 %5 8 %

V ery L ikely

L ikely

eutr l

U nlikely

V ery unlikely

0 % 2 5 % 5 0 % 7 5 %

T ota l

Preferred Current Preferred Current Preferred

4 4 %

2 9 %

2 7 %

2 4 %

4 5 %

3 1 %

2 7 %

2 7 %

4 6 %

1 3 %

4 3 %

4 4 %

Policy u te

ec l e lpromotions

G l ob a l ma ture ma rk ets

ener ln or t on

Policy u te

ec l e lpromotions

ener ln or t on

Current

2 7 %

4 3 %

3 0 %

4 0 %

3 4 %

2 6 %

5 0 %Cost/ terms

4 7 %3 8 %

2 8 %2 8 %

2 6 %

G l ob a l l if e

2 5 %2 4 %2 4 %2 2 %

2 0 %

5 7 %4 2 %

2 9 %1 6 %

2 6 %1 4 %

2 0 %1 1 %

1 7 %1 8 %1 7 %

5 9 %4 8 %

3 9 %3 4 %

3 1 %2 6 %3 0 %

2 5 %2 9 %

2 6 %2 6 %

ol cy enefit co er geR ecommended by broker, friends

re uency rele nce o co un c t one el o er ce rece e

ol cy not l gn to y l e c rcu t ncee e rch con ucte

er ence er on l ly le toner n re ut t on

not l e the y cl h n leu to er loy lty enefit

G l ob a l a uto G l ob a l h ome

A dv oca cyel hoo to reco en

ore th n once ye r nce ye r or le e er

Current Preferred Current Preferred Current Preferred

1 0 %

6 7 %

2 3 %

1 8 %

5 6 %

2 6 %

9 %

6 8 %

2 3 %

1 7 %

4 5 %

3 8 %

9 %

6 1 %

3 0 %

1 8 %

5 5 %

2 7 %

G l ob a l dev el op in g ma rk ets

Att

riti

onlo

e

ol

cy n

the

lt

on

th

3 8 %3 8 %3 7 %

5 9 %5 8 %

V ery L ikely

L ikely

eutr l

U nlikely

V ery unlikely

0 % 2 5 % 5 0 % 7 5 %

T ota l

Preferred Current Preferred Current Preferred

4 4 %

2 9 %

2 7 %

2 4 %

4 5 %

3 1 %

2 7 %

2 7 %

4 6 %

1 3 %

4 3 %

4 4 %

Policy u te

ec l e lpromotions

G l ob a l ma ture ma rk ets

ener ln or t on

Policy u te

ec l e lpromotions

ener ln or t on

Current

F ig ure 2on erg ng ru t e nno t on tren

e ent o the to re on cu to er ght clo e ol cy n c te th t n urer nee to fin y to unloc gre ter lue n cu to er rel t on h h le re n ng co et t e on r ce

he rel t on h et een oc cy n loy lty ch ng ng en oc te h e h gh ten ency to tch re h ro ch to u l ng n nt n ng loy lty re u re

u to er nt ore e n ng ul nter ct on th n urer n ny re ll ng to he r ro the r n urer t e ye r or rele nt n or t on ol cy u te n ec l e l ro ot on

5

T h e P a y A s Y ou L iv e ( P A Y L ) P rop osition

W h a t it is rel t ely ne n ur nce conce t e t ro ng controll le

eh our to re uce re u n re r cu to er t n ol e the n ure er on ro ng ongo ng t to the n urer out the r l e tyle through e t ng n ne t ource e g e r le technology n the n urer encour g ng cu to er to l e he lth er l e tyle to re uce the r o chron c llne

er c n l o tr c the r o n h t through n e ly cce le o le nter ce u ng the t to on tor n lter eh our uch et n e erc e to ro e he lth outco e n urer c n u e the eh our l t gener te to er on l e olut on e on he ghtene un er t n ng o cu to er he lth t tu n rele nt r ctor h n turn ro e the ol cy hol er th re r n count

T h e b roa der P A Y L ecosy stem out ore th n u t u ng e r le t to n or un er r t ng

t o er the otent l to cre te n eco y te o he lth n ell e ng rel te goo n er ce th t lue to the cu to er the n urer n the

ro er co un ty hole

n or ng n hot o cu to er o er ll ell e ng n he lth t tu n urer c n u e n ght n t ro eco y te nter ct on or e le

• r c ng fitne ct t e ro e r le e ce

• e er g ng r te he lth t

• ntegr t ng ye r o long tu n l ell e ng t to n or ore co lete cu to er n hot

lthough o e n urer re ng o ou l y n th rect on ery e h e ucce ully ntegr te n u l he lth t to rt

un er r t ng eng ne to u t re u e on ne r c ng r le

H ow it w ork s

P ol icy H ol der I n sura n ceBehav ioural data is included for loy alty programs and in policy pricing

U ser I n terf a ceData is passed to insurer through w earab le interface

U ser I nterface and communications link positiv e b ehav iour to insurance policy w ith price signal re- enforcing benefits of lifestyle

Policy - holder changes b ehav iour for improv edhealth outcomes and low er premiums

U ses w earab le dev ices to manage their health outcomes

Data

Pricing

C R M

6 I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance

PAYL benefits

Benefits to the insurer• cce to ne n re l t e

cu to er t or ort ol o r n cl o t t on

• ro ect nno t on to hel ttr ct ne cu to er ho nt to le healthier lifestyles

• n le er on l e e er ence to improve engagement w ith cu to er n ee en e t ng rel t on h to ro e cu to er

t c ne n retent on through ncre e cu to er t ct on

• ct ely encour ge g t l nter ct on to re uce long ter co t to er e

Benefits to the customer• ortun ty to ct ely t e ch rge

o the r o n he lth n le longer healthier lives

• u to er c n tr c the r o n l e tyle n et go l to ro e their habits

• cce to re r uch re u count or cce

to rtner enefit gy memberships, healthy eating

rogr he lthc re count

• e l t e nter ct on ll llo cu to er to ee the r

co er u to te n rele nt or the r nee

Benefits to the community• ro e co un ty he lth

outco e ue to he lth er l ng

• e uce tr n on u l c n r tructure n re ource e c te to the tre t ent o

chron c llne

• e uce re u o the c o re uce cl h ll ro e the or l ty o l e n ur nce

th n the ro er co un ty

• Demonstrating the greater, oun t on l ur o e o n ur nce co un l r co er ge ur o e le

7

I n troducin g th e P A Y L p rototy p e

or ng rototy e h een cre te to ro e the e l ty o th type of solution.

h rototy e olut on h lre y een te te th erent r le n re y or e on tr t on or ng th n urer c n co e elo

t lore er on te to eet the r u ne nee n tele t c tr tegy

he rototy e e on the ro en y ou r e n ur nce l t or h ch h een ucce ully e loye n uro e n orth er c n te o eh cle tele t c e r le technology ro e

ly l e tyle t to the rototy e n o le cce le nter ce re ort on l e tyle r le to n or re u r c ng he t o conce t h e u fic ent co on l ty or the rototy e to le er ge u t nt l

ele ent o the ro en olut on ee gure

or roo o conce t ur o e the rototy e e on hy othet c l n ur nce co ny u orte y n ctu r l r t ng eng ne th t u e ct ty n ut uch r c ng r le t c n e cce e through n

nter ct e h o r th t llo cu to er to on tor the r he lth t n er or nce go l th luetooth connect ty to ell e ng e ce uch t t tche n electron c c le

ll te t ng t h een recor e to u ort ongo ng r c ng o t t on

F ig ure 4th to lue or le er ge le rn ng ro

the ucce ul e loy ent o n other u ge e n ur nce olut on

E volved understanding of traditional pay as you use solution

( e. g. vehicle telematics) to build PA Y L

I nputs ( Driver)

U ser I nterface

CR M

Policy System

Pricing E ngine

Data

I nfrastructure

Policy System

Development effort is required to configure the technology for a new instance w hich takes w earable inputs rather than driver inputs. T he prototype has been built to successfully interface to w earables.

Pay A s Y ou L ive

Pay As Y

ou D

rive

8 I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance

F ea tures

1. F a st, sma rt sig n up• le n n le e g ng to e uc te

cu to er on the ro o t on

• or ng ctu r l r c ng eng ne to ro e e y u c uot ng or e le ct t on

• rect n o c ng n t ntly et u ro the platform

3. S imp l e to use• hrough e to or u er r en ly rt

hone nter ce

• og n to cce er on l e h o r th t le the u er through the roce th te yte n truct on

• ncor or te tool or cu to er n ge ent n ll ng

2. P erson a l ised g oa l s• et er on l er or nce t go l

• on tor rogre o er t e

• rn re r or ch e ng or e cee ng go l

9

W h ere to f rom h ere?

loo ng or or r th n ng n urer to co e elo th olut on or r e loy ent to r et hrough er e o ocu e r nt gure w e w ill w ork w ith you to:

• e tr teg c fit n ent y ro r te th to lue u ng or ho le ro ch

• efine the or ng rototy e n run e er ent to ro e the l ty of this solution

• e elo the cu to er lue ro o t on ro uct n o er t ng o el re u re ent or el ery to r et

• t e loy ent o the olut on th n u le ro uct tr c enefit n cre te clo e ee c loo or olut on refine ent

t n e c t ng ro ect to e r et le er through nno t on t o eth ng our thought le er re on te out th only hort n o or fir t o er nt ge no the t e to ct r the y ng

goes, “disrupt or be disrupted”.

Feedback loop and iteration

• Strategic alignment• Clear path to value

• Working prototype• Successful experiments• Proven viability

• Customer value proposition• Product design and pricing• Operating model requirements

• Successful deployment of minimum viable product• Data capturing• Benefits tracking

Strategic Assessment and Business Model

DesignProof of concept

Solution design

Go to market

Launch

Desired outcome

1

2

3

4

5

F ig ure 5 ro o e n cceler te n coll or t e ro ch to le er ge the

e t ng rototy e to e elo n l unch t lore olut on or your r et

ont ct u to cu the potential or e elo ng the

rototy e in your business.

10 I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance

O ur P A Y L a n d dig ita l th oug h t l ea ders

glo l net or o n ur nce technology ctu r l n cu to er tr tegy ec l t re re y to hel you

t e n en to en olut on to r et

W a l ter P oestch errtner n ur nce tr tegy

el lter oe tcher u ey co

lter he our ce n n ur nce r ct ce n le ng tele t c n t t e

R odn ey P rescotten or n ger ory

el ro ney re cott u ey co

er ng e ert e n ory o ney c n t th the ro on

o technology er ce

R ich a rd S uh rrtner g t l e

el r ch r uhr n ey co

ch r le g t l r ct ce n the c fic th ocu on u l ng n e loy ng ne g t l er ce o er ng

C h ris O ’ H eh irrtner

ory el

chr oheh r u ey co

hr le n lyt c n o ell ng r ct ce or fin nc l

er ce n the c fic n te le er n ctu r l er ce

J on a th a n Z h a oc fic n ur nce e er

e o ctu r l er ce el

on th n h o h ey co

J oel L imrtner

ory er ce el

oel l h ey co

11

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world  over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical  role in building a better working world for our people, for our  clients and for our communities.

EY refers to the global organisation, and may refer to one or more,  of the member firms of Ernst & Young Global Limited, each of which  is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organisation, please visit ey.com.

© 2015 Ernst & Young, Australia. All Rights Reserved.

APAC No. AUNZ00000555 S1528050 ED None

This communication provides general information which is current at the time of production. The information contained in this communication does not constitute advice and should not  be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Ernst & Young disclaims all responsibility and liability (including, without limitation, for any direct or indirect or consequential costs, loss or damage or loss of profits) arising from anything done or omitted to be done by any party in reliance, whether wholly or partially, on any of the information. Any party that relies on the information does so at its own risk. Liability limited by a scheme approved under Professional Standards Legislation.

ey.com

EY | Assurance | Tax | Transactions | Advisory