Insuring with a Shared Value Perspective

Typically, life insurers have limited engagement with their customers until a time of hardship, but one of Australia’s leading insurers is using the concept of shared value to help its clients before a claim is made, writes Ellie Cooper in this month’s Executive Insight.

Life insurer AIA Australia had focussed on achieving both economic and social outcomes for a number of years, before formally recognising their practice as shared value.

“The shared value journey, or real shared value journey in terms of being aware of it and starting to imbed it into our organisation, probably started about 18 months ago, when we became a founding member of the Shared Value Project,” AIA Australia CEO, Damien Mu, said.

“We felt there was a connection to shared value already but we had the ability to extend that, and shared value for us is where there’s an economic, measureable benefit but you’re really using your business practice to solve social and economic issues in society.

“And if you look at AIA, our mission is to be the best in life, but our purpose is around making a difference in people’s lives, so shared value is fundamentally at the core of that.

“So we started looking then at how we start to recognise what we’re doing as a business and start to more formally imbed a shared value philosophy to that.”

One of AIA’s key shared value initiatives is the Vitality program, which focusses on the health and wellbeing of their customers.

Vitality is a worldwide program developed by a South African company, called Discovery, and AIA has partnered with them in Asia and Australia.

“Life insurance is really important to have in place to protect [customers] and their families… but we’re thinking, ‘well how can we actually be there earlier in their life to help them’, and really that’s where the health and wellness program comes in,” Mu said.

“We provide our policy holders who take up Vitality with insurance access to a scientifically proven program which has over three million people worldwide. And what it does is help people know their health, improve their health and reward their health.”

Customers who take up the Vitality program have an initial health assessment online, followed by an in-person check-up with Chemart Australia. This information is used to generate a personalised pathway to improve lifestyle outcomes.

“We know that there’s three lifestyle habits – diet, exercise and smoking – that relate to four of the illnesses that cause 63 per cent of deaths worldwide, and that’s based on the Oxford Health Alliance,” Mu said.

“There’s three controllable behaviours around nutrition, smoking and exercise, which if you can make change in [means] that you have a better chance of improving your health.”

AIA also works with Anytime Fitness and Dietitians Australia to provide discounted services to encourage their customers to take an interest in their health.

“What this program is really based on is behavioural economics. We know that people always have a good desire to do something positive to improve their health, but making that initial change and sustaining that can be difficult,” Mu said.

“We look at providing, through the program, [opportunities] to know your health and improve your health, and provide access to partners to do that.”

Mu said the final aspect of the Vitality program seeks to reward participants who work to improve their lifestyle.

“If people have started that journey we want them to continue to be rewarded and incentivised to keep that behaviour up,” he said.

“We partner with the likes of Myer and Qantas, Hoyts and Endota Spa, and you can get up to 50 per cent off your flights with Qantas as a reward for continuing to do that healthy activity.

“It’s based on a point system, so you go through the statuses of bronze, silver, gold and platinum and what that does is unlock further discounts. It incentivises people to keep their status going up.”

As the reduction in claims due to injury or illness has decreased, AIA has generated an economic benefit which they have shared with Vitality participants.

“Where the shared value comes into it is not just people getting healthier, we actually provide up to a 20 per cent discount on our life insurance premiums as well based on their status,” Mu said.  

“The shared value aspect is we know you’re going to be healthier by engaging with the program, then the likelihood of you claiming goes down, so therefore we should pass that benefit back to you up front.”

AIS says that for customers who do suffer an illness or injury, it has an early intervention and return to work program.

Mu said since incorporating shared value the company has worked to improve the capability of the program and further embed it into their processes.

“We’ve been able to see an increase ten-fold in people being able to return to work who put in a claim and we’re off work due to injury or illness. There’s definitely been an economic benefit,” he said.

“In terms of every dollar spent on rehabilitation there’s been a $23 saving, which means ultimately the insurance premiums are lower as well, but most importantly we’ve seen the return to work rate increase by 48 per cent.

“We’re helping individuals get back to work and become productive which is what they want to do, which means it’s good for the employee, the employer and for the economy.

“We see shared value as we’re not just there to be the insurance provider, but extending that to say, ‘well how can we help them return to work’, which creates a benefit for them and their families, creates a benefit for the employer, and also for our business because obviously they’re no longer on claim.”

As soon as a claim is made, AIA’s rehabilitation and early intervention teams identify strategies and support that they can provide, working directly with the claimant to create a return to work program.

“It’s really about being able to have that capability and expertise within our organisation and within our claims process to identify when someone does have an injury or illness, what are the types of support we can give them to help them return to work, as opposed to just paying the benefit for a period of time,” Mu said.

“And it’s a genuine capability, it’s not about just being able to say, ‘ok well we could someone get some rehab and then refer them to a provider’, this is actually being able to have that capability from the initial notification of the claim.

“It’s been proven by research that if you can get to people within the first 90 days you have a far greater chance helping them get back to work, and, scarily, the statistics show that after 90 days the chance to help people return to work reduces by 50 per cent.

“That early intervention is really important. And therefore, us having that capability in-house, and getting notified of those claims means that we can help identify that early in the process.”

In some cases employers are engaging in the program as well, and AIA reported that 68 per cent of claimants returned to work with the same employer, which Mu said is “a really positive sign”.

He said since adopting the shared value terminology, AIA has benefited from networks and resources it wouldn’t have otherwise been exposed to.  

“When we found out about the shared value initiative, and the [Shared Value Project] in particular we said, ‘wow this is a great framework’, we can get lots of access to best practice, but also tools and research to help us on our journey in terms of embedding that into our organisation,” he said.

“We wanted to look at a way in which we could bring what we were doing to life and build a proper framework and process around it so it would help us be more successful in those initiatives, and have a common language which businesses internally and externally can start to use and communicate with one another.

“I think shared value is a philosophy and a strategy that will become imbedded in all organisations over time because what it really does start to do is identify how what you’re doing can not only create an economic benefit for your organisation but actually solve social and economic issues for society and government, and that’s a positive thing.”

As CEO, Mu said he and his team have the responsibility of creating an understanding of, and culture around, shared value principles within the organisation.

“The main challenge is really making sure from the top down the CEO and executive team are walking the talk on it, and you can get people to understand how it relates to what we do and then start to build that into your actual thinking,” he said.

“So the challenge is making sure everyone has a good understanding of shared value, and shared value is different to CSR. It’s making sure the education and knowledge around shared value is something the organisation and people within it understands.

“That’s just a process you’ve got to go through and it’s got to be led from the top.”

He also said that incorporating shared value is a continuing process, both within AIA and in the corporate world. Mu predicts that the social climate will encourage an increasing number of businesses to consider social outcomes.

“We’re early in our journey but we’ve definitely commenced and there’s many organisations who are continuing now to build shared value into their strategy and how they’re operating… it’s going to continue to grow,” he said.

“If we think about the issues that we face as a society, and let’s just take Australia in terms of growing costs of health and social security, we need to look at how the corporate world can find ways in which they can be part of the solution.

“Shared value is going to be really important and I think people are far more connected these days, we call it the ‘connected consumer’…. they’re looking to deal with organisations which they can see are transparent and they feel they can trust.

“It’s something that you just have to constantly work on and evolve. I don’t think there’s an end… it’s just a continual evolution.”