Upload
max-taffel
View
240
Download
0
Embed Size (px)
Citation preview
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
We are all leading busier lives. In between juggling family, professional and other commitments, most of us are finding less time to focus on ourselves and our own personal wellbeing. This behaviour is contributing to the sustained increase in chronic, preventable disease — which annually contributes to 60% of deaths globally.
It begs the question: Do life and health insurers have a role to play in helping their customers reduce the risk of chronic disease? How might insurers create products that proactively encourage and reward healthier living?
For years, forward-thinking insurers have conceptualised Pay As You Live Insurance. EY, with its usage based insurance team, is helping turn this concept into reality.
Key question for insurers:
How to help reduce preventable diseases with customers and the broader community while improving long-term profitability?
Figure 1 Annual mortality rate from Chronic Diseases
38 million people die from chronic disease annually• 6 million deaths
are tobacco related
• 3.2 million deaths are caused by insufficient physical activity
• 3.3 million deaths are caused by harmful drinking
• 1.7 million cardiovascular deaths are caused from excess salt intake
56% Cardiovascular diseases 26% Cancer 13% Chronic respiratory diseases 5% Diabetes
3
Key question for insurers:
How to create competitive advantage through leveraging digital technology?
Trends creating opportunities in Pay As You Live insurance
Growth of preventable lifestyle diseasesChronic diseases are expected to account for as much as 73% of all deaths by 2020. Also referred to as ‘lifestyle diseases’, they include: type two diabetes, cardiovascular disease, cancer and lung diseases. Although genetics and environmental factors play a role, controllable behaviours such as smoking, diet, exercise, sleeping patterns and stress are the most significant causes.
In other words, the majority of these diseases can be prevented by leading a healthier lifestyle. The World Health Organisation (WHO) suggests that the risk of such diseases can by reduced by up to 31% if an adult participates in a minimum of 150 minutes of moderate intensity aerobic activity throughout the week — just over 20 minutes of exercise per day.
Potential for digital technology to improve health outcomesWith 1.8 billion internet-ready smartphones already in existence, the wearables fitness tracker market is set to become a $30 billion industry by 2018. These devices are already helping billions of people combat lifestyle diseases through the likes of Nike+ (more than 18 million users) and the 7 Minute Workout Apps (more than 10 million installs). Health and fitness apps are the fastest growing category on iTunes and Android.
This, combined with the adoption of online social networking in healthcare, gives insurers access to an unprecedented amount of data and insight into customer behaviors. Leveraged correctly, this will inform premium pricing and unlock new value for insurers, customers and the broader community.
Figure 2Converging disruptive innovation trends
The internet of everything
connected devices by 2018
$8bn
Health applications
applications dedicated to health and fitness
Nike+ (18m+ users)
7 Minute Workout (10m+ downloads)
100,000+
Wearable devices
industry by 2018$30bn
Social media & online communities
Message boards & blogs
Social networks
“Breaks down the walls of patient-provider 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 Introducing ‘Pay As You Live’ (PAYL) Insurance
Disintegrating customer loyaltyFindings from EY’s recent Global Customer Insurance Survey (Figure 3) highlight the industry’s growing problems with consumer relationships. Trust is falling. Switching is on the rise. PAYL-type solutions will play an important role in helping insurers to build more meaningful and ‘stickier’ relationships with their customers.
Figure 3 EY’s Global Customer Insurance Survey findings, insights and considerations
Key question for insurers:
How to attract, deepen and retain customers to drive greater value from new and existing relationships?
To reduce attrition, and increase engagement insurers can leverage technology and data to differentiate on experience and price, increasing the perceived value of their offerings.
27%
43%
30%
40%
34%
26%
50%Cost/terms
47%38%
28%28%
26%
Global life
25%24%24%22%
20%
57%42%
29%16%
26%14%
20%11%
17%18%17%
59%48%
39%34%
31%26%30%
25%29%
26%26%
Policy benefits/coverageRecommended by broker, friends
Frequency/relevance of communicationLevel of service received
Policy did not align to my life circumstancesResearch I conducted
Experienced personal/family milestonesBrand reputation
Did not like the way claim was handledCustomer loyalty benefits
Global auto Global home
AdvocacyLikelihood to recommend
More than once a year Once a year or less Never
Current Preferred Current Preferred Current Preferred
10%
67%
23%
18%
56%
26%
9%
68%
23%
17%
45%
38%
9%
61%
30%
18%
55%
27%
Global developing markets
Att
riti
onCl
osed
a p
olic
y in
the
last
18
mon
ths
38%38%37%
59%58%
Very Likely
Likely
Neutral
Unlikely
Very unlikely
0% 100%25% 50% 75%
Total
Preferred Current Preferred Current Preferred
44%
29%
27%
24%
45%
31%
27%
27%
46%
13%
43%
44%
Policy updates
Special deals/promotions
Global mature markets
Generalinformation
Policy updates
Special deals/promotions
Generalinformation
Current
27%
43%
30%
40%
34%
26%
50%Cost/terms
47%38%
28%28%
26%
Global life
25%24%24%22%
20%
57%42%
29%16%
26%14%
20%11%
17%18%17%
59%48%
39%34%
31%26%30%
25%29%
26%26%
Policy benefits/coverageRecommended by broker, friends
Frequency/relevance of communicationLevel of service received
Policy did not align to my life circumstancesResearch I conducted
Experienced personal/family milestonesBrand reputation
Did not like the way claim was handledCustomer loyalty benefits
Global auto Global home
AdvocacyLikelihood to recommend
More than once a year Once a year or less Never
Current Preferred Current Preferred Current Preferred
10%
67%
23%
18%
56%
26%
9%
68%
23%
17%
45%
38%
9%
61%
30%
18%
55%
27%
Global developing markets
Att
riti
onCl
osed
a p
olic
y in
the
last
18
mon
ths
38%38%37%
59%58%
Very Likely
Likely
Neutral
Unlikely
Very unlikely
0% 100%25% 50% 75%
Total
Preferred Current Preferred Current Preferred
44%
29%
27%
24%
45%
31%
27%
27%
46%
13%
43%
44%
Policy updates
Special deals/promotions
Global mature markets
Generalinformation
Policy updates
Special deals/promotions
Generalinformation
Current
27%
43%
30%
40%
34%
26%
50%Cost/terms
47%38%
28%28%
26%
Global life
25%24%24%22%
20%
57%42%
29%16%
26%14%
20%11%
17%18%17%
59%48%
39%34%
31%26%30%
25%29%
26%26%
Policy benefits/coverageRecommended by broker, friends
Frequency/relevance of communicationLevel of service received
Policy did not align to my life circumstancesResearch I conducted
Experienced personal/family milestonesBrand reputation
Did not like the way claim was handledCustomer loyalty benefits
Global auto Global home
AdvocacyLikelihood to recommend
More than once a year Once a year or less Never
Current Preferred Current Preferred Current Preferred
10%
67%
23%
18%
56%
26%
9%
68%
23%
17%
45%
38%
9%
61%
30%
18%
55%
27%
Global developing markets
Att
riti
onCl
osed
a p
olic
y in
the
last
18
mon
ths
38%38%37%
59%58%
Very Likely
Likely
Neutral
Unlikely
Very unlikely
0% 100%25% 50% 75%
Total
Preferred Current Preferred Current Preferred
44%
29%
27%
24%
45%
31%
27%
27%
46%
13%
43%
44%
Policy updates
Special deals/promotions
Global mature markets
Generalinformation
Policy updates
Special deals/promotions
Generalinformation
Current
Figure 2Converging disruptive innovation trends
Assessment of the top reasons a customer might close a policy indicates that insurers need to find ways to unlock greater value in customer relationships while remaining competitive on price
The relationship between advocacy and loyalty is changing. Even advocates have a high tendency to switch — a fresh approach to building and maintaining loyalty is required
Customers want more, meaningful interactions with insurers and many are willing to hear from their insurers 2+ times a year for relevant information, policy updates and special deals/promotions
5
The Pay As You Live (PAYL) Proposition
What it isPAYL is a relatively new insurance concept aimed at improving controllable behaviours to reduce premiums and reward customers. It involves the insured person providing ongoing data to the insurer about their lifestyle through existing and new data sources (e.g. wearable technology) and the insurer encouraging customers to live a healthier lifestyle to reduce the risk of chronic illness.
Users can also track their own habits through an easily accessible mobile interface, using the data to monitor and alter behaviours, such as diet and exercise, to improve health outcomes. Insurers can use the behavioural data generated to personalise solutions based on a heightened understanding of a customer’s health status and relevant risk factors. This in turn provides the policy holder with rewards and discounts.
The broader PAYL ecosystemPAYL is about more than just using wearable data to inform underwriting. It offers the potential to create an ecosystem of health and wellbeing related goods and services that add value to the customer, the insurer and the broader community as a whole.
In forming a snapshot of a customer’s overall wellbeing and health status, insurers can use insights and data from ecosystem interactions. For example:
• Tracking fitness activities from wearable devices
• Leveraging private health data
• Integrating EY’s 25+ years of longitudinal wellbeing data to inform a more complete customer ‘snapshot’
Although some insurers are making obvious plays in this direction, very few have successfully integrated individual health data to a smart underwriting engine to adjust premiums based on new pricing variables.
How it works
Policy Holder InsuranceBehavioural data is included for loyalty programs and in policy pricing
User InterfaceData is passed to insurer through wearable interface
User Interface and communications link positive behaviour to insurance policy with price signal re-enforcing benefits of lifestyle
Policy-holder changes behaviour for improvedhealth outcomes and lower premiums
Uses wearable devices to manage their health outcomes
Data
Pricing
CRM
6 Introducing ‘Pay As You Live’ (PAYL) Insurance
PAYL benefits
Benefits to the insurer• Access to new and real time
customer data for portfolio risk and claims optimisation
• Projects innovation to help attract new customers who want to lead healthier lifestyles
• Enables personalised experience to improve engagement with customers and deepen existing relationships to improve customer ‘stickiness’ and retention through increased customer satisfaction
• Actively encourages digital interaction to reduce long term costs to serve
Benefits to the customer• Opportunity to actively take charge
of their own health and lead longer, healthier lives
• Customers can track their own lifestyle and set goals to improve their habits
• Access to rewards such as premium discounts or access to partner benefits (gym memberships, healthy eating programs, healthcare discounts)
• Real time interaction will allow customers to keep their cover up-to-date and relevant for their needs
Benefits to the community• Improved community health
outcomes due to healthier living
• Reduced strain on public infrastructure and resources dedicated to the treatment of chronic illness
• Reduced premiums off the back of reduced claims. This will improve the affordability of life insurance within the broader community
• Demonstrating the greater, foundational purpose of insurance – communal risk coverage (purpose-led)
7
Introducing the PAYL prototype
A working PAYL prototype has been created to prove the feasibility of this type of solution.This prototype solution has already been tested with different variables and is ready for demonstration. Working with EY, insurers can co-develop a tailored version, adapted to meet their business needs and telematics strategy.
The PAYL prototype is based on the proven ‘Pay As You Drive’ (PAYD insurance platform, which has been successfully deployed in Europe and North America. Instead of vehicle telematics, wearable technology provides daily lifestyle data to the prototype and a mobile accessible interface reports on lifestyle variables to inform premium pricing. The two concepts have sufficient commonality for the PAYL prototype to leverage substantial elements of the proven PAYD solution. See Figure 4.
For proof of concept purposes, the prototype is based on a hypothetical insurance company, supported by an actuarial ratings engine that uses activity inputs such as pricing variables. It can be accessed through an interactive dashboard that allows customers to monitor their health data and performance goals, with Bluetooth connectivity to wellbeing devices such as Fit Bits, watches and electronic scales.
All testing data has been recorded to support ongoing pricing optimisation.
Figure 4Path to value for PAYL leverages learnings from the successful deployment of PAYD and other usage based insurance solutions
Evolved understanding of traditional pay as you use solution
(e.g. vehicle telematics) to build PAYL
Inputs (Driver)
User Interface
CRM
Policy System
Pricing Engine
Data
Infrastructure
Policy System
Development effort is required to configure the technology for a new instance which takes wearable inputs rather than driver inputs. The prototype has been built to successfully interface to wearables.
Pay As You Live
Pay As Y
ou D
rive
8 Introducing ‘Pay As You Live’ (PAYL) Insurance
Features
1. Fast, smart sign up• Clean and simple messaging to educate
customers on the PAYL proposition
• A working actuarial pricing engine to provide easy, quick quoting for seamless activation
• Direct invoicing instantly set up from the platform
3. Simple to use• Through a desktop or a user-friendly smart
phone interface
• Log in to access a personalised dashboard that leads the user through the process with step-by-step instructions
• Incorporates tools for customer management and billing
2. Personalised goals• Set personal performance data goals
• Monitor progress over time
• Earn rewards for achieving or exceeding goals
9
Where to from here?
EY is looking for forward-thinking insurers to co-develop this solution for rapid deployment to market. Through a series of focused sprints (Figure 5) we will work with you to:
• Assess strategic fit and identify appropriate path to value using a workshop-led approach
• Refine the working prototype and run experiments to prove the viability of this solution
• Develop the customer value proposition, product and operating model requirements for delivery to market
• Assist deployment of the solution with a minimum viable product, track benefits and create a closed feedback loop for solution refinement
It is an exciting prospect to be a market leader through innovation — it is something our thought leaders are passionate about. With only a short window for first-mover advantage, now is the time to act. Or as the saying 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
Figure 5EY proposes an accelerated and collaborative approach to leverage the existing prototype to develop and launch a tailored solution for your market
Contact us to discuss the potential for developing the PAYL prototype in your business.
10 Introducing ‘Pay As You Live’ (PAYL) Insurance
Our PAYL and digital thought leaders
EY’s global network of insurance, technology, actuarial and customer strategy specialists are ready to help you take an end-to-end PAYL solution to market.
Walter PoestcherPartner, EY Insurance StrategyTel: +61 2 9258 [email protected]
Walter heads our Oceania insurance practice and is leading EY’s telematics initiatives
Rodney PrescottSenior Manager, IT Advisory Tel: +61 2 9276 9959 [email protected]
Offering expertise in IT Advisory, Rodney can assist with the provision of technology services
Richard SuhrPartner, EY APAC Digital Lead Tel: +64 4499 [email protected]
Richard leads EY’s Digital practice in the Asia-Pacific with a focus on building and deploying new digital service offerings
Chris O’HehirPartner, Advisory Tel: +61 2 9248 [email protected]
Chris leads EY’s Analytics and Modelling practice for financial services in the Asia-Pacific and is a team leader in Actuarial services
Jonathan ZhaoAsia-Pacific Insurance Leader & Head of Actuarial Services Tel: +852 2846 [email protected]
Joel LimPartner, Advisory Services Tel: +852 5363 2115 [email protected]
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