New VitalityHealth research shows insurers should take healthy behaviour into account when calculating premiums• More than half (53%) of consumers want insurers to take their healthy behaviour into consideration when calculating their premium
• 78% of PMI holders would increase their activity levels if it meant their premium was reduced
• VitalityHealth’s ‘ABC’ pricing framework increases transparency at policy renewal and aims to end customer confusion around renewals
New research from VitalityHealth reveals that more than half (53%) of consumers want insurers to take their healthy behaviour such as diet or exercise into consideration when calculating their premium.
The study of more than 1,000 individual private medical insurance (PMI) policy holders shows that people want their health insurer to take factors such as their age, medical history and healthy behaviour into consideration when calculating their insurance premiums. Age was the most important factor with 64% of PMI holders saying they wanted their insurer to take it into account. Medical history (60%) was the second most important consideration, followed by healthy behaviour (53%), and policy claims history (48%).
Additionally, more than three quarters (78%) of those surveyed would attempt to live healthier lives if it meant their insurer reduced their premium. This was especially true among younger policy holders, with 87% of those aged 25-34 saying they would increase activity levels if it meant lower premiums.
VitalityHealth has recognised the difficulties people have in understanding the pricing of premiums under the industry-standard No Claims Discount (NCD) structure and has changed its approach to ensure renewal premium changes are fair, intuitive and transparent for members. The new renewal pricing mechanism calculates renewal premiums based on an ‘ABC’ model which takes into account increasing Age; the Base medical inflation rate; and a new Claims and wellness engagement measure.
The company has recently received its first wave of premium renewals under the ABC structure and it has seen lower average renewal increases as a result of greater health engagement. With the VitalityHealth programme, everyone starts on Bronze status and depending on how much they look after their health, they can move up the status tiers to Silver, Gold and Platinum. When looking at the recent renewals, those members with a Silver status received 2.3% lower average increases, Gold members received 4% lower average increases, and Platinum members received 4.5% lower average increases.
Greg Levine, Sales and Distribution Director at Vitality Health, said: “At Vitality, our core purpose is to help make people healthier and enhance and protect their lives. This study shows that the majority of people would welcome the opportunity to reduce their premium by engaging with their health. It is a vindication of both our approach to incentivising healthy behaviour through our Vitality wellness programme, and our groundbreaking ABC model which sees the effects of age, medical inflation, claims and wellness engagement combined to deliver a fairer, more intuitive and transparent pricing structure at policy renewal.
“Furthermore, our recent premium renewals show that those members who engage with their health have seen lower average premium renewals. This is great news as not only are they getting healthier, they are also paying less for the health cover that we provide.”
As part of Vitality’s wellness programme, the company incentivises healthy behaviour by providing immediate rewards for members such as weekly Starbucks coffees and cinema tickets, or reducing the cost of an Apple Watch. Vitality points can be earned by exercising at member gyms, or walking, running or cycling while using a linked activity tracking device as well as by buying healthy food or completing various health checks. In the longer term, as members improve their Vitality status through earning points, the company rewards them with discounts including up to 40% on British Airways return flights in Europe and up to 50% off Eurostar tickets.
1. Opinium, on behalf of VitalityHealth, surveyed 1,009 private health insurance policy holders from 18th to 25th October 2017. This report is based on the results of an online survey. The results have been weighted to nationally representative criteria.