The positive impact of policyholder health on insurance with Wesley Clay

00:00:00: [Music]

00:00:03: RePlay by Hannover Re. Expert insights on life and health insurance.

00:00:08: [Music]

00:00:17: How data can enhance individual health outcomes, which healthcare initiatives have positively

00:00:22: impacted insurers and policyholders, and what insurers can implement to reduce claims costs.

00:00:28: Welcome to Replay by Hannover Re. I'm your host Susanne Loomis and today we'll talk to

00:00:32: Wesley Clay about health and wellness in the life and health insurance industry.

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00:00:39: This podcast is for general information only, no professional advice and a subject to change.

00:00:44: You can find the full disclaimer in our show notes.

00:00:47: Welcome to our podcast, Wesley.

00:00:49: Hey, Susanne. Thanks for the invite.

00:00:51: Wesley is managing director and responsible for our life and health business at our subsidiary

00:00:56: in South Africa. He was also the founding managing director of our office in Mumbai,

00:01:01: India, and brings a lot of experience to the discussion.

00:01:05: So Wesley, let's dive right in here. It seems like the term health and wellness is everywhere

00:01:10: these days. Can you explain what exactly it means in the context of life and health insurance?

00:01:15: Yes, for sure. So, so health to me is the state of your physical, mental and social

00:01:21: well-being and not just the absence of a disease or illness. And if we think about the insurance

00:01:27: world, health is really a key factor determining the risk and so what premiums you're going

00:01:33: to pay for your type of policy. So your health application really is a key driver on the cost

00:01:39: of your insurance and even if you'll even be offered or accepted for insurance.

00:01:44: I really believe though that the insurers should be playing more proactive role in supporting

00:01:48: policy holders to achieve their best outcomes throughout the whole of the policy lifetime

00:01:54: and not just be really aware of it at conception. And I hope through our conversation, those

00:01:58: will come through.

00:01:59: I'm sure it will. And what about wellness?

00:02:01: Wellness is more about that holistic journey to kind of optimal health, which again includes

00:02:06: that physical, mental and social well-being. And there really is a booming wellness economy.

00:02:11: Estimates are at around six trillion US dollars globally. So, wow, fairly, fairly substantial.

00:02:18: And what we're also seeing is that consumers are really fortunately now really looking at

00:02:21: the data, the science and the outcomes and not just trying any new fad or trend.

00:02:26: Absolutely. It's great to see the shift towards information based decision making rather than

00:02:30: just following new trends. And who benefits the most from maintaining good health?

00:02:37: So if we break it down, there are really three main entities that are vested in the elements

00:02:43: I spoke about, your social, your physical, even financial well-being. And sometimes all

00:02:47: of them together. And these entities are yourself. And by that, I'm also referring to your family

00:02:52: independence, the government, the state or your employer. And of course, the insurance

00:02:57: company and actually each of these benefits in your continued good health, but in different

00:03:02: ways and obviously to different degrees.

00:03:05: And so where specifically does life and health insurance come into play?

00:03:09: Well globally, we still see more and more claims coming and arising from non-communicable

00:03:14: diseases.

00:03:15: In non-communicable diseases, meaning diseases that are not transmitted directly from person

00:03:20: to person.

00:03:21: Yes, correct. So like your cancers, heart attacks, chronic respiratory diseases and not to mention

00:03:26: of course, a recent surge in mental illnesses. So your poor health or let's say lack of healthy

00:03:32: lifestyle practices can need to increase claims. And so really need to think about how we manage

00:03:37: your health, stress all these factors and help people live longer and healthier lives.

00:03:43: And obviously that helps manage costs and ensure cover can be available to more people

00:03:47: on the spectrums.

00:03:48: I'm seeing a number of insurers actually on a global basis, ensuring the health management

00:03:53: space. So becoming health management service providers and actually the insurance products

00:03:59: or just the vehicles to which policyholders can access those services.

00:04:04: Another feature to mention is that lapses are also a big cost driver in insurance. And

00:04:09: we see far better laps outcomes with insurers actively engaging with policyholders on their

00:04:13: health. So we really should be changing the narrative around insurance. In other words,

00:04:19: helping policyholders become before claiming even better in their health outcomes.

00:04:25: That makes sense. So we have three main groups that are invested in your good health. We

00:04:31: have a rise of non-communicable diseases largely caused by lifestyle choices leading to increased

00:04:37: claims. And we have life insurers that are more and more becoming health management service

00:04:43: providers. And I want to learn more about this in a second. But first, I know you're

00:04:48: very passionate about this topic. And what kept you in this field?

00:04:52: So in South Africa, insurance is an environment that really keeps you on your toes. It lives

00:04:57: and breathes innovation. And we actively seek out different approaches when it comes to

00:05:02: insurance. There's a strong regulator oversight, but an environment that's really supportive

00:05:06: of crafting, creating, developing new products and solutions that are beneficial to purchases.

00:05:13: And as you know, many world firsts actually came out of South Africa. The critical illness

00:05:17: products probably being the best known. I've been very fortunate also in my various roles

00:05:21: to have been given tremendous autonomy to try solutions, negotiate new partnerships,

00:05:27: and really to just experiment. So at this micro level, given the freedom to test within

00:05:32: the company and combine with the South African environment has really led to a number of

00:05:36: new and exciting solutions. And I guess many of these initiatives have a strong connection

00:05:42: making insurance better, which is I guess a very broad statement. But I've naturally

00:05:48: gravitated towards understanding what the drivers of mortality and morbidity experience

00:05:51: are and how we can play a role in improving this, which is then I guess beneficial to the

00:05:57: insurance sector, but also equally massively important to the end consumer and their families

00:06:02: at large. And what get you particularly interested in the health and wellness element? You may

00:06:08: not believe this, but I want it to be a doctor. So when deciding on a university degree, it

00:06:16: was always kind of a toss up between medicine and actual science. Given I've always had

00:06:20: a fascination with biology and particularly the human body. So I guess these fields of

00:06:25: interest have managed to coalesce quite beautifully and allowing me to feed both interests. So

00:06:30: on the one hand, I'm exposed to calculating probabilities of someone dying, getting ill.

00:06:35: And on the other hand, I guess I can see what, where and how we can positively influence

00:06:41: those probabilities. And getting to engage with our medical doctors and OT is really

00:06:45: allows me to tap into the biology side to get a sense of what the drivers are.

00:06:49: Oh, that's interesting. Thanks for sharing. So going back to something you mentioned earlier

00:06:54: about insurance becoming health management service providers. So let's talk about wearables

00:07:00: or health apps in that context. The data collected through them can provide a very good understanding

00:07:07: about one's health status and ultimately how to improve it. Can you share more about that?

00:07:13: Yes, absolutely. The evolution of wearables and fitness track is really kind of revolutionized

00:07:19: health monitoring. You know, when we started way back when it was just a step tracker and

00:07:24: you could just clip it on your belt. And now we have these commercially available devices

00:07:28: producing metrics on your heart rate, variability, oxygen saturation, pulse wave form at near

00:07:34: medical grade accuracy. And so it's been a fantastic experience to watch. Well, excuse

00:07:39: the pun to watch this and how these devices have become more and more sophisticated. And

00:07:45: I really believe insurance should be embracing this technology to provide the real time health

00:07:49: insights and really encourage and support policy holders to move into and maintain kind

00:07:55: of an optimal health outcome. If I can take a chance, I'd just like to share about a company

00:08:00: that we've been working with. Yeah, this company leverages computational systems biology.

00:08:07: And this is a field of study that combines biology, computer science, maths and physics

00:08:12: to really understand how the biological systems function and how disease can affect them.

00:08:18: And this company has developed a capability that through the metrics recorded on your enabled

00:08:22: wearable, can illustrate the impact of your actions during a day and how that impacts

00:08:27: your biological age, which is different than your chronological age. Yes, right. So the

00:08:33: biological age estimates how a person is aging according to many different kind of physiological

00:08:38: and biological factors. And really, as a better indicator of your health than just simply

00:08:42: looking chronological age, which just measures how many years you've been alive. So this company

00:08:47: uses over around 150 physiological data points, kind of the real activities between them and

00:08:53: correlations to your really comprehensive picture of your health. And this I find amazing. And

00:08:59: I would love to see how we can bring this more into the insurance community and actually

00:09:03: more society at large, which is likely to have a tremendous effect. And so why don't

00:09:08: we just use this type of technology to improve overall health and wellness? So there are

00:09:13: some challenges. To me, health and wellness is really hinged on two pillars, which is

00:09:19: awareness and action. It's quite basic if you think about it. And we provide access

00:09:24: to information, the education, screening diagnostics, creating awareness about your health. And

00:09:30: following this, we want you to be able to drive a course of action to kind of steer people

00:09:34: to better health. So creating awareness and encouraging action across, you know, diverse

00:09:39: population of ages, genders and cultures is quite difficult in itself. How would we measure

00:09:46: it and cost effectively make people aware of potential harmful outcomes based on a genetics,

00:09:52: lifestyle or simply bad habits?

00:09:55: I really also think that such knowledge should be passed on to the insurer because the more

00:09:59: insurer knows about someone's health, the more they can actually support and actually encourage

00:10:05: a preventative action. And if I turn to the action piece quickly, how do we create the

00:10:09: right incentives and motivation for individuals to make and maintain necessary changes? It really

00:10:15: requires that we can package the awareness piece into an actions recommendations and insights

00:10:21: that are actually easy to understand and really personalised to that individual's circumstances.

00:10:27: So insurers themselves are generally not geared towards providing these two pillars and collaboration

00:10:33: with external partners, suppliers, providers, Israeli essential to provide comprehensive

00:10:38: health and wellness solutions. And you notice that as a consumer, we want it to be easy and

00:10:44: seamless, irrespective of how many parties need to be working behind the scenes to create the

00:10:49: solution. So I guess for me, the integration of these various providers is perhaps the biggest

00:10:55: challenge. Right. And there are also costs involved. Correct. So the insurer would incur

00:11:01: additional costs to facilitate and providing these. And generally we find there's a large

00:11:06: timing difference between the outlier of costs to actually experiencing and benefiting from these

00:11:12: changes, sometimes years into the future, and sometimes not easy to define in what amount

00:11:17: or quantum, which can create some financial strain. But luckily, there's reinsurance and

00:11:23: other mechanisms that we can use to alleviate the timing and uncertainty of these kind of

00:11:27: cash flow issues. Got it. Besides the cost factor and creating awareness, what about

00:11:33: different requirements that markets have? An important topic that pops into my head is data

00:11:38: protection. Absolutely. Data protection. And particularly when we're dealing with sensitive

00:11:43: information on your health or medical records, data security is absolutely paramount. And I

00:11:48: think the providers are really aware of this and the security standards are exceptionally high.

00:11:52: Actually, in many instances, the personally identifiable information is really hidden from the

00:11:58: various parties to actually ensure anonymity. And to my mind, a validation of this is that we're

00:12:04: seeing a really positive trend where more people are willing to share their health data with the

00:12:08: insurance companies because they're really starting to see the benefits of doing so.

00:12:12: Mm-hmm. So we're seeing that there's a willingness to spend money on premium features and apps now.

00:12:18: And I guess the integration of weird devices like smartwatches and fitness trackers

00:12:23: is actually enhancing engagement and convenience and data accuracy. This indicates to me that

00:12:28: actually both awareness and action are actually being progressed quite naturally. And as a

00:12:33: consequence, the many insurers now collaborating with the leaders and pioneers in this space.

00:12:38: Yeah. And we also have a separate podcast episode with Lisa Bollboa about innovation in life and

00:12:44: health insurance, where she talks about the benefits of adding services to an insurance portfolio.

00:12:49: So can you share examples of successful health care initiatives that have positively impacted both

00:12:57: insurers and policyholders? Yes, of course. I guess we've been involved and are involved in

00:13:02: various programs globally, but perhaps to mention our longest running partnership,

00:13:07: which is with Vitality, a leading science-based behavioral training program.

00:13:11: And what exactly does Vitality do? I guess in essence, what Vitality does is to seek to improve

00:13:17: the health outcomes, make people healthier, and less reduce health care costs. And to a large

00:13:22: extent, those risk savings are then shared back with consumers. Mm-hmm. And what are some results

00:13:29: that individuals using Vitality's service have seen? So we've got clinical evidence that indicates

00:13:36: Vitality members are healthier, live longer, and actually claim far less. And to give you a concrete

00:13:42: example, in South Africa, where Vitality was started some more than 30 years ago. And what we

00:13:48: see is that the highly engaged Vitality members have about 76% lower mortality rate. Wow. And on

00:13:54: average, actually live about 13 to 20 years longer than the rest of the insured population.

00:13:59: I just want to be clear, this is public information. Okay. So it's free to use.

00:14:04: But on the reinsurance side of the tannery, we've also kind of ratified that impact through our own

00:14:09: independent studies and evaluation of the data. And are there other initiatives with a positive

00:14:14: impact on life insurance outcomes? Yes. So when it comes to mind is platforms that provide electronic

00:14:20: health records. We've really seen a surge in those over the last few years. But interoperability,

00:14:26: so that communication across systems remains a challenge. Mm-hmm. So there's sometimes conflicting

00:14:33: needs for the usage and the format of the data, which means it's not always easily and readily

00:14:38: adaptable for us in the insurance world. To give you some context, much of this data, somewhere

00:14:43: around 80%, is unstructured. So low text imagery signals and translating that into information

00:14:50: that insurance can use is quite tricky. And on top of that, it's really difficult in many parts of

00:14:55: the world to actually link patient identifiers to policyholders. So it's an added challenge.

00:15:01: Perhaps a more positive, more practical initiative is that many employers and insurance companies,

00:15:07: healthcare companies, are actually offering discounted fees or gym or fitness classes.

00:15:12: So really encouraging that first step, that exercise opportunity. Can I mention another example?

00:15:17: Oh, please go ahead. So a product I really love is one we developed with one of the large pharmaceutical

00:15:23: companies. And through this product, we offer a predetermined fixed payout when a claimant is

00:15:29: eligible for targeted cancer treatment. So based on a genetic test, we can work out what drugs

00:15:35: give the best outcome for claimants. And because we started paying these claims out now,

00:15:40: it's really illustrative to me that this has been a successful and quite a necessary product.

00:15:45: To give you some insights and response rates for chemotherapy around generally 30%,

00:15:50: whereas if we offer targeted therapy, this improves to 80%, but are generally quite expensive to offer.

00:15:58: Yeah, that's impressive. And I want to talk more about how these initiatives can translate into

00:16:03: tangible benefits for insurers and end customers. Can you give us more insight into that?

00:16:09: Yeah, that's a great question. To answer quite simply, I would say that if nothing else,

00:16:13: the health and wellness programs serve to attract and to retain healthy lives. Now,

00:16:19: this is massively important for an insurer as it needs to improve mortality outcomes over time

00:16:24: and obviously the lapse rates. So if we consider two insurance companies, one that offers programs

00:16:30: and benefits and perhaps discounts to healthy lives, and the other doesn't, the healthy lives will

00:16:37: naturally move to or stay with the company offering the health programs, which leaves company B with

00:16:42: an increasingly unhealthy portfolio of lives. And this is not good for anyone. So balancing

00:16:48: against the upfront and ongoing program costs, these initiatives should not only be good for

00:16:52: policyholders' health and well-being, but also on the premiums that actually get charged.

00:16:56: And so how can partnerships between reinsurers, insurers, health care providers and wellness

00:17:05: organizations foster a more comprehensive approach to health?

00:17:09: In working together, I really think these entities can create that integrated health

00:17:13: solution, combining insurance coverage with the health care services and wellness programs.

00:17:18: And this really leads to better health outcomes for the policyholders and reduced claims

00:17:22: for the same costs for insurers. So partnerships can facilitate that sharing of health data,

00:17:28: the analytics, really enabling us for more accurate risk assessments in these

00:17:33: personnel's health interventions. And this helps identifying those high risk individuals

00:17:38: and providing targeted preventative care. So yeah, for me, collaborations are really going to only

00:17:44: enhance the customer engagement by offering a holistic approach to health and wellness.

00:17:48: And that leads me to a great final question. So you'd say health should be approached with a

00:17:54: holistic view that encompasses physical, mental, emotional, and lifestyle aspects?

00:18:01: Absolutely, 100%. That interplay and interconnectedness of these elements is actually non-refutable.

00:18:07: I think someone that is in chronic pain, so for example, has a physical ailment perhaps,

00:18:13: this can really cause tremendous emotional and mental anguish, which causes depression and anxiety.

00:18:19: And then on the flip side, if you have long periods of high stress or pressure,

00:18:23: this can then weaken the immune system and or impact on a cardiovascular health, for example.

00:18:27: So yeah, absolutely a holistic approach is needed. But in addition, we really need to recognize

00:18:33: where on the wellness journey a particular person may be sitting. So that personalization

00:18:37: is really paramount in this context. Well, thank you, Wesley. What an interesting conversation.

00:18:44: Thanks. I really enjoyed our chat and there's always lots we can read and learn more. And

00:18:49: perhaps a book I can recommend is one by Dr. Peter Attyak called Outlive, which really is a great

00:18:55: read. Oh, that's great. Thank you. Definitely something to look into. So today we talked about

00:19:01: the impact of individual health outcomes on life and health insurance and different ways

00:19:07: that initiatives translate into benefits for both insurers and customers.

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