A new report published by FSG and the Shared Value Initiative this week recognizes the Vitality business model, formed by Discovery and deployed by five of the world’s leading insurers, as a leading example of shared value in insurance.
The report, “Insuring Shared Value: How Insurers Gain Competitive Advantage by Better Addressing Society’s Needs”, makes the case for insurers to pursue shared value, a business strategy that aligns core profit making activities with pursuing large scale social impact, by activating an entire ecosystem of complementary stakeholders to create, for example, more resilient and insurable cities or prevent ill-health in target population groups.
It is clear that insurers have the unique opportunity to “monetise” better health, and align their commercial interests with making society healthier.
Discovery Chief Executive Adrian Gore commented on the inclusion of the Vitality Shared-Value Insurance model in the report: “It is critical that institutions like ours add value to society and are not just about a transactional relationship. The profound thing about Vitality is that there are no trade-offs. Member’s experience better health, insurers have fewer claims and hence greater profitability and society benefits from healthier, more productive citizens.”
The research also identifies a number of powerful global trends that are affecting society and the environment and, therefore, the context in which businesses operate.
The Vitality Shared-Value Insurance model is increasingly relevant because it is responsive to current trends and addresses changing realities, including the demand for corporate citizenship, ageing populations, the emergence of technology and the growing burden of lifestyle diseases. Increasingly, four types of behaviour (poor diet, physical inactivity, tobacco use, and excess alcohol intake) are causing preventable diseases which lead to 60% of deaths worldwide.
The Vitality business model, grounded in behavioural economics, incentivizes people to make healthier choices and dynamically rewards them for reducing their risk, in the form of premium reductions and other benefits. There is clinical evidence that Vitality members are healthier, live longer and claim less. For example, in South Africa where Vitality was created 20 years ago, highly engaged Vitality members have a 76% lower mortality rate and on average live 13 to 21 years longer than the rest of the insured population.
By incentivizing behaviour to achieve better health outcomes, Vitality enables a lowering of risk, thereby generating value for insurers and society.
About Discovery Limited
Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment products and wellness markets. Founded in 1992, Discovery is guided by a clear core purpose – to make people healthier and to enhance and protect their lives. Underpinning this core purpose is the belief that through innovation, Discovery can be a powerful market disruptor and a force for social good. To pursue this goal, Discovery employs its Vitality Shared-Value Insurance model, which incentivises healthier behaviour for the benefit of clients, insurers and society. With headquarters in Johannesburg, South Africa, Discovery has expanded its operations globally and currently impacts 6.9 million lives in 15 countries and has close to 12 000 employees worldwide.
Discovery is an authorised financial services provider and trades under the code “DSY” on the Johannesburg Securities Exchange.
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