Can Insurance Make You Healthier?

Obesity, smoking, sexually transmitted diseases, drunk driving....some of the most significant health risks can actually be addressed by behavioral change. One insurance company is attempting to reorient coverage to address behavioral change. Discovery Ltd of South Africa is using a mix of Big Data, predictive analytics, machine learning algorithms and other technologies to predict and reward behavioral change.
This approach was initially greeted with derision by traditional insurance  companies, which base risk on medical profiles. Dr Ryan Noach, Deputy Chief Executive Officer of Discovery Health says, “We look at each individual and their potential to change their behavior over time. The goal is then to offer value through upfront premium discounts, and to keep incentivizing behavior that has a positive effect on long-term health.”
Dr. Ryan Noach, Deputy CEO, Discovery Health (South Africa)
Discovery's behavior-based wellness program, Vitality, was launched in South Africa in late 1997 and now expanded to the US, Europe, Asia, Australia and China. Since then, Vitality has been featured as  a Harvard Business School case study for its effect on social health issues like obesity, non-communicable diseases and lack of physical exercise. Noach says, “We built a benefits program addressing real-time, personalized  lifestyle assessment that can lower insurances rates and help people become healthier.”
One of the key factors is gamification and instant feedback. Tangible benefits and rewards accrue proportionally with the level of engagement. In real time, users receive personalized health information, as well as discounts for partner companies, such as travel. For example, quitting smoking is worth significantly more points than completing a questionnaire. “The program recognizes changes  in behavior and builds incentives to encourage that healthy behavior”.
Vitality members begin with Blue status and progress to Bronze, Silver, Gold and finally, Diamond status. High status levels enjoy lower insurance premiums. Points and status can be earned in a variety of ways:
• Completing health checks and assessments of fitness, diet and general health.
• Making healthy choices like quitting smoking, managing weight, buying and eating healthier foods, etc.
• Being active, completing sporting challenges or using a fitness device or app to track activity.
Research Confirms the Potential for Behavior Change
A five year, longitudinal study of Vitality members focused on gym membership and recorded gym visits. The study found that active Vitality members had a longer life expectancy and 14% reduction in healthcare costs, with shorter hospital stays.
One application works with the Apple Watch. Vitality Active Rewards tracks and recommends personalized, weekly fitness goals, dynamically adjusted based on progress. Achieving weekly goals leads to rewards like free coffee or fruit smoothies. “The basic principle in behavioral economics is loss aversion – an incentive to avoid losing something. The result is a 25% increase in physical activity among the 122,500 Vitality members who  downloaded the app and activated Vitality Active Rewards.” 
Behavioral Change Outside of South Africa 
Vitality adoption and results were positive in Discovery’s second primary market, the United Kingdom. The next great opportunity is the United States, where the Centers for Disease Control announced that 36% of the population is clinically obese (Body Mass Index of 30% of higher). US insurers, such as Aetna and Cigna, are now piloting their own behavioral-based programs to address the world's largest healthcare market. 
Ryan Noach will be in Tel Aviv as a featured presenter at the mHealth Israel conference, February 18th. Technology companies focused on behavioral change should request 1x1 meetings with Ryan Noach HERE.