The role for insurers in encouraging healthier living

In our customers’ lives we are one of a select few who are privy to their private and personal information, some of which can be used to predict the likelihood of preventable illnesses. We have an obligation to change an approach that has gone unchallenged for too long, writes Jordan Hawke.

It’s been my firm belief for a long time that something is amiss in the traditional insurance space.

In our customers’ lives we are one of a select few who are privy to their private and personal information. Some of this information can be used to predict the likelihood of impending chronic — and preventable — illnesses.

I personally feel we have an obligation to change an approach that has gone unchallenged for too long. How can we see the chronic results of customers and just let it go?

I’d like to share a story with you in which this scenario became my reality. I’m a typical 46-year-old; I work hard, I play hard, and I have a young family. Last week I had a health risk assessment done and what I discovered shook me: I’m a ticking time bomb.

My results had an overlay of genetic predisposition — my father had his first heart attack at 48 and died at 60. That was 18 years ago.

My health condition, the condition my father had and that of thousands of Australians, is preventable. As an industry we have an opportunity to reverse the increasing prevalence of chronic diseases in our society.

• every 10 minutes an Australian dies of heart disease;
• more than 50 per cent of Australians are overweight;
• each year around 400,000 Australians are hospitalised with heart-related problems;
• every day 275 Australians develop type 2 diabetes; and
• 3,000 undergo limb amputation due to diabetes.

These are real people who have families, jobs, and social networks. These people are affected by conditions that limit their ability to provide for their children and maintain their quality of life.

Life insurers collect detailed personal information about social habits and health from everyone who applies for life insurance.

That information includes health indicators such as body mass index, blood pressure, cholesterol levels, blood glucose levels, and health-relevant lifestyle information such as alcohol consumption and smoking habits.

In many of the applications we receive a customer who will have at least one of these warning signs for preventable disease:

• obesity;
• cardiovascular disease; and
• pre or type 2 diabetes.

The approach of the traditional insurer up to this point has been to use the information we have about customers to determine the premiums they pay.

It’s a process of assessing risk and pricing the insurance policy based on that risk assessment. For example, based on my recent health assessment, if I had taken out a policy today, my premium would have been loaded by 100 per cent.

This traditional life insurance paradigm has meant we simply banked the premium and waited for the claim.

However, armed with information about the potential future health of our customers, I don’t think it’s putting it too strongly to say that we have an obligation to help advisers and their clients not only to assure their lifestyle through life insurance, but to understand how they and their families can become healthier.

The new dimension

We’re about to witness the emergence of a new dimension in the relationship between customer, adviser, and insurance provider.

Most of you will be able to make the connection in your minds with the term ‘grudge purchase’ or ‘necessary evil’ in relation to life insurance.

It relates to the way the typical customers feel about taking a life insurance policy, and about the transactional nature of the relationship they’ve had to date with their insurer.

The new dimension that I’m talking about will involve a drastically changed relationship — from transactional, with the promise of a deferred benefit should a claim need to be made, to a positive exchange offering a range of benefits that money can’t buy; I’m talking improved health now and in the future, the potential for increased longevity, and many stories about grandparents getting to know their grandkids.

Crucially, the role of the adviser in this third dimension is also likely to change to that of an advocate for wellbeing.

I believe that in the near future, when an adviser is assessing the relative merits of one insurer over another for their clients, it will become remiss for them not to take into account the immediate health and wellbeing implications of their advice.

Those statistics tell the story. The health of Australians is a huge social and public policy issue.

If the insurance industry and advisers can step up to meet the challenge of helping Australians to become healthier, as we’re in a unique position to do, we can work towards decreasing the $94 billion that Australians currently spend on health-related issues, and help deliver to many of them a lifestyle that really is worth insuring.

Jordan Hawke is general manager at Asteron.