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John Hancock’s Vitality program changed the insurer/policyholder relationship from being a brief interaction focused on the customer’s mortality to becoming an ongoing engagement focused on the customer’s health and well-being. Brooks Tingle, John Hancock’s President and CEO, spoke about how Vitality has continued to provide value to customers during the pandemic and what that means for the life insurance customer experience more broadly, during the ITC Global session, “Transforming Life Insurance to Help Customers Live Longer, Healthier Lives,” moderated by Katherine Chiglinski of Bloomberg News.
Acknowledging the tragedy of the pandemic Tingle related that it had both expected and unexpected effects on life insurance customer behavior. As expected, consumers living through COVID-19 were more mindful of their mortality and as a result more interested in life insurance. “It’s unfortunate it takes a global pandemic to encourage that sort of interest in our solutions, but there has been an uptick in demand in life insurance,” he said.
Tingle did not expect a very noticeable increase in consumers thinking about their baseline health. That development was logical, however, given that the more robust the health of the individual, the better their outcome should they be infected with the coronavirus, he acknowledged. He cited a survey from a reinsurer asking respondents what they would do differently as a result of COVID-19, and 70 percent said they would lose weight.
The pandemic has had a very adverse effect on people’s financial condition, which raises the question of how lapse rates might increase. This effect raises a paradox, according to Tingle: though people are more mindful of their mortality, life insurance has also become harder to buy, and they are suffering financial hardship. However, insurers have taken measures to decrease lapse rates by extending grace periods, he added.
Net Decrease in Lapse Rates
“Normally the midst of a pandemic would be the last time you want to drop your life insurance coverage, but at the same time, people are struggling economically now,” Tingle observed. “So far it’s netted out to an actual decrease in lapse rates.”
When it comes to the effect of the pandemic on the traditionally difficult process of buying life insurance, there is good news along with the tragic, according to Tingle. “I hate to talk about ‘silver linings’ in the midst of all the suffering associated with COVID, but it has forced the industry to fully embrace digital purchasing methods,” he said. “Many companies have been moving that way, but I’ve joked for a long time that I don’t think there’s a product left in the modern digital economy that’s more difficult to buy than life insurance—for a such a valuable, such an essential solution, it’s just way too hard to buy.”
Tingle related that the components of the buying process included elements that were less viable during a pandemic. For example, when the public response to COVID-19 was fully active, consumers were far more reluctant to have a paramedic conduct a physical exam, and doctors’ offices had higher priorities than to do so.
Accelerated Adoption of Digital Capabilities
“We all were really forced to accelerate things we had already been doing which are going to have a wonderful lasting benefit for consumers in our industry—and that’s applying digital capabilities to the buying process,” Tingle commented. “The use of electronic health records in particular I think will be a game changer.”
Currently a major slice of the time devoted to underwriting life insurance policies is consumed by accessing the applicant’s medical history, Tingle explained. However, consumers increasingly have apps or portals to access their health records, which opens up the possibility of a one-time-access capability. “In theory we could be completing that purchase process in moments or days rather than the many weeks that it takes today,” he said. “That makes a ton of sense.”
When it comes to digital capabilities for consumers are already policyholders, the Vitality program has driven vastly increased interaction between John Hancock and its customers and enabled insights and responses to issues caused by the pandemic, according to Tingle.
“In the old days we would interact with our customers once or twice a year, maybe we send them a bill or an annual statement—or that really exciting privacy notice that you would send them each year,” Tingle quipped. “We’re interacting with our customers 30 to 40 times a month now, and we could see almost right away certain changes in behavior that are again sort of logical but still fascinating to see.”
Adjusting to the Difficulties of Pandemic Life
Perhaps the most obvious challenge to the Vitality program was that activities that earned members points were no longer feasible. The program works by giving policyholders an opportunity to accumulate points by undertaking healthy activities; those points can be used towards discounts and other rewards, Tingle explained. Gym visits are one of the most common ways to earn points, but gyms were closing in response to the pandemic.
“We very quickly came up with an alternative method for our customers to earn points: simply take a selfie of themselves exercising at home and we give them that that credit for a gym visit,” Tingle said.
As routine doctor visits became harder to schedule, members had also lost the ability to earn points through biometric readings. John Hancock responded by adding points based on prior history. Similarly, clinicians and first responders who weren’t able to wear sensor devices were allowed to send a picture of their ID tags and given the points they would normally be earning.
John Hancock also ran a ‘virtual 5k’ for Vitality members, which Tingle described as one of the most fun things done within the program so far. “We’re so fortunate to have that kind of relationship with our customers that we can see what’s going on in their lives, and most importantly use that data to respond in a really effective way to offer them solutions,” he said.