In March 2014, AIA Australia launched Vitality, the world’s leading health and wellness program, with more than 3.4 million members worldwide. Sold through independent financial advisers and key partners to people purchasing life insurance, the program uses the latest research in behavioural economics, incentivisation and wellness to stimulate people to take the first steps towards healthy living, and to make these lifestyle changes permanent. It is based on extensive research, which shows that consumers who make irrational health choices will generally take positive steps to improve their health if they are given a clear incentive to do so.
AIA Vitality members begin the program by completing health and fitness assessments and earn points for undertaking healthy activities, such as running and going to the gym. In addition, members are rewarded with points for displaying healthy behaviour, including discounts on shopping, entertainment and travel purchases and discounts on their insurance premiums.
Evidence for the efficacy of the program – in terms of improved clinical outcomes, reduced healthcare costs, lower hospital admissions, increased productivity at work and improved mortality rates – has been profiled in leading academic journals such as the American Journal of Health Promotion and the Harvard Business School1. While the program is just over two years old in Australia, it is expected to deliver similar results in terms of public health outcomes.
In the spirit of shared value, it is not just the policy holder / member that benefits from the Vitality program. By having a healthier pool of members that are less likely to claim in future and recover faster, AIA Australia can pass more savings back to them through higher discounted premiums and better rewards. Current data shows that policy holders that are heavily engaged on the program are up to 40 per cent less likely to lapse on their policy than those not on AIA Vitality.
According to research compiled by AIA Australia and not-for-profit foundation Super Friend in 2013, if an employee is off work for 20 days, they have a 70 per cent chance of ever returning to work. If they are off for 45 days, this goes down to 50 per cent, and after 70 days their chance of ever returning to work is only 35 per cent. On a national scale, over 88 million days are lost to the Australian economy due to absenteeism, at a cost of $27.5 billion per annum in sick leave costs and lost productivity2.
At the same time, the average duration for an income protection claim is 20 weeks (140 days). Reducing this average by just one week would save the insurance industry a total of $84 million a year.
By encouraging people to be healthier, both the incidence and duration of claims can be reduced, in turn reducing the direct costs to insurers and the broader costs to society. It is a win-win-win situation.
1 Porter, Michael E., Kramer, Mark R., and Aldo Sesia. “Discovery Limited.” Harvard Business School Case 715-423, December 2014. (Revised May 2015.)
2 Medibank & PwC Workplace Wellness in Australia 2010