With the percentage of American households with life insurance policies at historic lows, the industry is turning to technology to attract and retain customers.
Boston-based John Hancock, which offers life insurance to 2.6 million policyholders, is harnessing the capabilities of health and fitness-tracking devices. Partnerships with tech providers like Fitbit, Amazon and Apple allow customers to voluntarily share data on physical activity and healthy habits, in exchange for discounts on premiums and other rewards.
In recent years, John Hancock integrated with Fitbit and the Apple Watch. Its latest tie-up announced in August was with the Amazon Halo wristband, allowing customers to share physical activity and sleep data.
From John Hancock’s perspective, the arrangement amounts to a win-win for the customer and the insurer: Customers who maintain healthy habits get rewarded, and in return, the insurer builds the client relationship and can potentially cut costs over time. It also helps the insurer study customer behavior and helps them build better risk models.
“It’s a shared value insurance,” Lindsay Hanson, head of partnerships and innovation at John Hancock, told FinLedger. “Whether that’s through sharing value back in terms of saving on their life insurance premium or offering them rewards, there’s a benefit to the customer there’s a benefit in it to the organization and then there’s a benefit overall to society.”
The partnership model
The ability to share health data through a mobile device – including FibBit, Halo and Apple Watch – is part of a bigger initiative called the John Hancock Vitality program. Information sharing through devices is made possible through an agreement with global wellness company Vitality, whose technology enables the seamless transfer of information between the client and the insurer.
Vitality, which works with John Hancock in the U.S. and with John Hancock’s Canadian parent company Manulife, has partnerships with other global insurers, including pan-Asian life insurer AIA, China-based Ping An and Prudential Argentina.
Since a regular flow of communication is required between the insurer and the tech provider, a three-way conversation between John Hancock, Vitality and the tech provider ensures operations run smoothly, explained Hanson.
“For the most part, we’re really having one conversation all with the same end goal for our customers,” she said.
The John Hancock Vitality program has a free (Vitality GO) and paid tier (Vitality Plus) with monthly fees starting at $2 per month. Vitality Plus members get up to 15% in annual premium savings; a free Fitbit device or discounted Apple Watch; a free Headspace app subscription and Amazon Prime membership. The company’s Vitality program also serves patients with diabetes, who can monitor their health and take advantage of deeper premium discounts through monitoring through an initiative called John Hancock Aspire which was launched last year. Aspire is the result of a partnership with Alphabet-owned Verily Life Sciences and virtual diabetes clinic OnDuo.
Integration with mobile fitness trackers helps the company reach customers who may be accustomed to use these devices to track a range of health-related information.
“It’s allowed us to reach additional consumers, whether that’s a younger population, whether that’s a more mobile-centric population, it’s allowed us to serve more customers than before,” said Hanson.
John Hancock said tracking physical activity, healthy eating habits, medical visits and other health-related information through the devices is optional, and the company said it’s seeing greater demand for these offerings during the pandemic.
According to Hanson, since the launch of the Vitality program in 2015, customer response has exceeded the company’s expectations. John Hancock now typically interacts with customers 30 to 40 times per month, compared with one to two times per month prior to the Vitality rollout.
In recent years, John Hancock has seen Vitality adoption grow from 52% in 2018 to 87% in 2019, she noted. On the science side, Hanson said John Hancock customers take two times as many steps as the average American; visit their doctors more for preventative screenings, and often report improved body mass index readings after one year of using the tool.
Despite the advantages of health data tracking through mobile devices, privacy advocates have raised concerns about these types of arrangements, particularly around how health data is used. Issues around privacy also preoccupy regulators, with data privacy considerations reportedly being a stumbling block to the close of Google’s planned acquisition of Fitbit.
While the use of customer data for segmentation and marketing is commonplace in other industries, John Hancock emphasized that it takes data privacy seriously and safeguards the confidentiality of client data through various internal technical measures. Information gathered through Vitality is not used for any other purpose other than improving the client experience, noted Hanson.
“We respect our clients’ privacy, especially with us being a health-related [enterprise] with life insurance, and it’s just been paramount for us as a company to continue to respect and protect our customers’ information,” she said.
Jeff Goldberg, executive vice president of research and consulting at advisory firm Novarica, told FinLedger insurers are becoming more open to tapping the power of mobile health tracking devices because it helps them make better risk correlation decisions.
“The data is available for the first time, and [insurers] have always been the first to jump on data sources,” he said. “Suddenly we’ve got this internet of things, giving insurance companies access to data that they never had before, and access to real-time data in a way that they never had before.”
For life insurance providers, explained Goldberg, programs like Vitality also help them achieve important customer acquisition and retention goals, especially as fewer young customers buy life insurance. While there is competitive pressure, a major obstacle life insurance providers face is getting prospects to enroll and to retain those relationships over time.
“They’re doing it to compete against the inertia of nothing — of people not buying insurance at the same rates,” said Goldberg. “This is a way of attracting younger life insurance buyers who are historically underinsured, and it’s a way to engage with them.”