Health Insurance Reimagined: John Hancock’s Vitality (Using Data to Promote Health)

John Hancock introduces a program called Vitality, which rewards consumers for healthy behavior based on data collected by Fitbit.

 

The “Health and Wellness” consumer category is going through lots of changes. According to a recent Forbes report from The Hartman Group, consumers are more aware of the connection between health, wellness, food, energy, than ever before. For example, “More so than any other generation, Gen Z looks to exercise as a way to treat or prevent illness, and it is particularly relevant for emotional and stress-related issues”.[1]

 

At the same time, the rise of wearable tech, like FitBit and Apple Watch, gives users the ability to collect and monitor their own data. Whether people were competing over how many steps they could take a day, or how many hours they slept, users had an unprecedented level of ease in tracking their every move.

 

John Hancock, an insurance provider, created a program called “Vitality” to capture value from this change in behavior. Modeled on successful programs from other countries,  Like other John Hancock realized that they could benefit from the positive and proactive attitude towards preventative health (exercise, diet) and rising levels of comfort with wearable technology that collects data. They created the program “Vitality”, which is novel in that it can monitor the data of consumer’s health habits and reward consumers for good behavior. Participants in the Vitality program are provided with a free Fitbit to track their movements. A consumer can win “vitality points” by making healthy decisions about exercise, which the healthcare provider can then see through the Fitbit data.[2] This can translate into real savings:

 

“The higher your Vitality Status the more you can save on your life insurance premiums – up to 10% a year. You can also earn up to $600 in annual savings on your healthy food purchases, as well Apple Watch® Series 2 for just $25, simply by exercising regularly.”[3]

 

 

Instead of a static relationship between healthcare provider and provide, and offline data collection that relies on truthful information, consumers are incentivized to make better decisions about their healthcare and able to improve their deductibles and/or premiums through their healthy choices.

 

John Hancock Incentivizing the consumers to make healthier choices benefits the insurance company in several ways. First, it is widely accepted that prevention is better than the cure. The companies are saving themselves money down the road by creating a generation of healthier customers who are motivated to keep themselves healthy. Second, insurance companies can better manage their claims and forecasts with more accurate data and dynamic pricing – they can better service their customers with a better snapshot. Third, insurance companies can start communicating much more data with doctors and physicians, which will not only cut down on administration costs but help both doctor and patient make more informed and accurate choices as opposed to sometimes misleading self-reporting. [4]

 

John Hancock is giving consumers the option to “giv[e] out private data for discount in insurance”.[5] For consumers ready to share their data and stay healthy to spend less, John Hancock captures a great market

[1] https://www.forbes.com/sites/thehartmangroup/2015/11/19/consumer-trends-in-health-and-wellness/#10bbea49313e

[2] https://www.jhrewardslife.com/how-it-works.html

[3] https://www.jhrewardslife.com/how-it-works.html

[4] https://www.forbes.com/sites/bernardmarr/2015/04/21/how-big-data-is-changing-healthcare/#1d63667b2873

[5] https://www.nytimes.com/2015/04/08/your-money/giving-out-private-data-for-discount-in-insurance.html?_r=1

Previous:

Starbucks – Grinding Data and Brewing Results

Next:

One Robot to Rule Them All

5 thoughts on “Health Insurance Reimagined: John Hancock’s Vitality (Using Data to Promote Health)

  1. Wow, this is phenomenal. Actually the first time I really see an application of the health data trend + insurance companies capturing the richness of the data. Can imagine this partnership would be super valuable for basically all health insurance companies. For the first time, they’ll be able to really get accurate data on how healthy people are.

    Would be interesting to discuss the end game in class. Where could this go? Would you have integrated Apple and insurance accounts? Or apps that track movements? And how can Vitality win in this market?

    Love it!

  2. It is definitely interesting. I’m just curious about the value capture part. Do they partner with fitbit and share the data? Am also interested in the focus group they select. Are fitbit users representative of the overall population?

  3. Being a bit skeptical about health insurance company’s intentions, in the wrong hands this tool could be used to discriminate against people with pre-existing health conditions or people with poor health. In economic terms, higher risk should be priced accordingly, but in the world of healthcare this raises questions. Would health insurance companies increase the price on everyone that does not use the fitbit? How would you prevent such practices?

  4. That is quite a novel way of using wearable devices and applying them to help insurance companies. While it indirectly does help the insurance companies in planning their funds for long term, I do wonder if this can be mass marketed so that every consumer be it current or potential participates.

  5. Thank you for the post Caroline. When you speak about insurance, it’s all about managing risks. Here we see another excellent example how modern technologies can add value to even such an established business like insurance. I believe that data analysis can significantly improve financial models for insurance companies on a micro level, thus add significant value to the business.
    On the other hand, this is a perfect economic incentive for people to live healthier lives. Many societies tried to do that for a long time. Here we have a single company helping government to fix healthcare problems, by making people to live a healthy lifestyle. I think it’s going to be a disruptive technology in insurance, because as soon as people are going to be rewarded for being healthy, they will start doing that, because it comes alone with their needs. I believe that every person wants to live a healthy and long live. What company will you choose the one that rewards you for your health and charges a lower premium, or the one that is indifferent about you and charges you a higher premium? The answer is obvious.
    As soon as John Hancock implements this scheme, it will get a significant market share. Others had to implement similar practices as well. That’s why it’s going to be successful.

Leave a comment