Introducing
‘Pay As You Live’
(PAYL) Insurance
Insurance that rewards
a healthier lifestyle
August 2015
“Those who think
they have not time
for bodily exercise
will sooner or later
have to find time
for illness.”
Edward Stanley (British Statesman)
2 Introducing ‘Pay As You Live’ (PAYL) Insurance
W e are
all leading
b usier liv es.
F ig ure 1
nnu l ort l ty r te
ro
hron c
e e
I n betw een j uggling family,
ro e on l n other co
t ent
o t o u re fin ng le t e
to ocu on our el e n our
ow n personal w ellbeing.
r o cul r e e
ncer
hron c re r tory e e
ete
38 mil l ion p eop l e
e ro chron c
e e nnu lly
h eh our contr ut ng to the u t ne ncre e n
chron c re ent le e e
h ch nnu lly contr ute to
o e th glo lly
t eg the ue t on o l e n he lth n urer h e role to l y
n hel ng the r cu to er re uce the r o chron c e e
o
ght n urer cre te ro uct th t ro ct ely encour ge
n re r he lth er l ng
or ye r or r th n ng n urer h e conce tu l e
e n ur nce
th t u ge
e n ur nce te
turn th conce t nto re l ty
ll on e th
are tob a cco rel a ted
•
ll on e th re
c u e y insufficient
p h y sica l a ctiv ity
y
ou
hel ng
•
•
•
c u e
ll on e th re
y h a rmf ul drin k in g
ll on c r o cul r
e th re c u e ro
ex cess sa l t in ta k e
K ey q uestion f or in surers:
o to hel re uce
re ent le e e
th
cu to er n the ro er
co
un ty h le
ro ng
long ter
rofit l ty
3
T ren ds crea tin g op p ortun ities
in P a y A s Y ou L iv e in sura n ce
G row th of p rev en
hron c e e
e th y
ty e t o
ete
lthough genet c
eh our uch
tre
re the o
ta b l e l if esty l e disea ses
re e ecte to ccount or
uch
o ll
l o re erre to
l e tyle e e they nclu e
c r o cul r e e c ncer n lung e e
n en ron ent l ctor l y role controll le
o ng et e erc e lee ng ttern n
t gn fic nt c u e
F ig ure 2
on erg ng
ru t e nno t on tren
T h e in tern et of ev ery th in g
$ 8 b n
connected dev ices
b y 2 0 1 8
n other or the
or ty o the e e e c n e re ente
y le ng he lth er l e tyle he orl e lth rg n t on
ugge t th t the r o uch e e c n y re uce y u to
n ult rt c te n
n u o
nute o o er te
nten ty ero c ct ty throughout the ee
u t o er
nute
o e erc e er y
W ea ra b l e dev ices
$ 3 0 b n
P oten tia l f or dig ita l tech n ol og y to imp rov e h ea l th outcomes
th
ll on nternet re y
rt hone lre y n e tence
the e r le fitne tr c er
r et
et to eco e
ll on
n u try y
he e e ce re lre y hel ng ll on o
eo le co
t l e tyle e e through the l e o
e
ore
th n
ll on u er n the
nute or out
ore th n
ll on n t ll
e lth n fitne
re the
te t gro ng
c tegory on une n n ro
ne
th the o t on o onl ne oc l net or ng n
h co
he lthc re g e n urer cce to n un rece ente
ount
o
t n n ght nto cu to er eh or
e er ge correctly
th
ll n or
re u
r c ng n unloc ne
lue or n urer
cu to er n the ro er co
un ty
industry b y 2 0 1 8
H ea l th a p p l ica tion s
1 0 0 ,0 0 0 +
li
N ik e+
K ey q uestion f or
in surers:
o to cre te
co et t e
nt ge
through leveraging
g t l technology
tions e i
te to e lt
n fitness
u er
7 M in ute W ork out
o nlo
S ocia l media & on l in e commun ities
“ Breaks dow n the w alls
of patient- prov ider
communication”
M essa g e b oa rds
& b l og s
S ocia l n etw ork s
Statistics have been sourced from:
http://www.who.int/mediacentre/factsheets/
fs355/en/
EY Digital Sate of the Nation, Digitaltrends.com,
PHA Australia
4 I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance
Disin teg ra tin g customer l oy a l ty
n ng ro
recent lo l u to er n ur nce ur ey gure h ghl ght
the n u try gro ng ro le
th con u er rel t on h
ru t
ll ng
tch ng on the r e
ty e olut on
ll l y n
ort nt role n hel ng
n urer to u l
ore e n ng ul n t c er rel t on h
th the r cu to er
F ig ure 3
lo l u to er n ur nce ur ey fin ng
e
ent o the to re on
to fin
y to unloc gre ter
on r ce
n ght
n con
er t on
cu to er ght clo e
ol cy n c te th t n urer nee
lue n cu to er rel t on h
h le re
n ng co et t e
G l ob a l l if e
G l ob a l l if e
Cost/ terms
Cost/ terms
ol cy enefit co er geG l ob
ol cy enefit co er ge
R ecommended by broker, terms
friends
R ecommended by broker, Cost/
friends
re uency releol cy
nceenefit
o co counerc ge
t on
re uency rele nce o co
un c t on
e elby
o broker,
er cefriends
rece e
R ecommended
e el o er ce rece e
ol cy
not l gn to
y lcoe c rcu
t nce
ol cy renotuency
l gn rele
to y lnce
e corcu
t un
ncec t on
e eerrch
con
ucte
e
el
o
ce
rece
e e rch con ucte e
er
ence
er
on
l
ly
le
tone
oler
cyencenoterl gn
t nce
on tol y l lye c rcu
le tone
r
n
re
ut
er en rch
cont on
uctet on
re ut
not l eerthe
y cl ly le htone
n le
er
ence
on
l
not l e the y cl
h n le
u to er
loyreltyut enefit
r
n
t
u to er loy lty enefit on
2
not l e the y cl
h n le
G l ob a l a uto
G l ob a l a uto
5 0 %
a l l if e 4 7 %
3 8 %
2 8 %
2 8 %
5 0 %
4 7 %
3 85 %0 %
2 8 % 4 7 %
2388%%
5 7 %
5 7 %
4 2 %
G l ob a l a uto
4 2 %
2 9 %
1 6 %
G l ob a l h ome
G l ob a l h ome
2 9 %
5 7 %
G l ob a l h ome4 8 %
3 9 %
4 2 %
2 6 %
2 6 % 2 9 %
1 4 %
1 4 % 1 6 %
2 0 %
2 0 % 2 6 %
14 1% %
1
1 1 %
1 7 %
1 7 % 2 0 %
1 8 %
1 81 %1 %
1 %7 %
1
7
1 7 %
1 8 %
1 6 %
2 6 %
2 6 % 2 8 %
2 85 %%
2
2 5 %
2 4 %
2 4 % 2 6 %
2 4 %
2 4 % 2 5 %
2
2 %
2 2 % 2 4 %
2 40 %%
2
0 %
2 2 %
3 4 %
3 1 %
5 9 %
4 8 %
5 9 %
3 9 % 5 9 %
3 4 4% 8 %
3 31 9% %
23 64 %%
3 0 %
3
3 0 % 1 %
2 %5 %
2
6
2 5 %
2 9 %
2 9 % 3 0 %
2
6 %
2 6 % 2 5 %
22 9 6 % %
2 6 %
2 6 %
2 6 %
u to er loy lty enefit
1 7 %
0 %
he rel t on h
et een
oc cy n 2 loy
lty ch ng ng
en
oc te h 2 e6 % h gh
ten ency to
tch
re h
ro ch to u l ng n
nt n ng loy lty re u re
A ttrition
lo e A ttrition
ol cy n the l t
onth
A ttrition
lo e
ol cy n the l t
onth
lo e
ol cy n the l t
onth
5 8 % 5 9 %
5 8 % 5 9 %
T ota l
T ota l
T ota l
5 8 % 5 9 %
3 7 %
3 7 %
3 8 %
3 8 %
3 8 %
3 7 %
3 8 %
V ery unlikely
V ery unlikely
U nlikely
U nlikely
V ery
unlikely
eutr
l
eutr l
U nlikely
L ikely
L ikely
eutr
V ery lL ikely
V ery L ikely
L ikely
3 8 %
2 5 %
2 5 %
K ey q uestion f or
in surers:
5 0 %
7 5 %
5 0 %
7 5 %
V ery L ikely
A dv oca cy
A dv oca cy
el
hoo
to
reco
en
0 %
2 5 el
% hoo to reco
5 0 %
7 5 %
en
A dv oca cy
to reco
to er
nt ore e elnhoo
ng ul
nter cten
on
th n urer n
ny re ll ng to he
l ob a l ma ture ma
G l ob a l devuel op integ ma nrk etsec l
theG l rob na G l urer
e rk ets
ye r or rele nt n or G tl obon
ma ture ma t rk ets
a l devolelcy
op in g ma rk ets
0 %
0 %
3 8 %
o re uce ttr t on
n ncre e
engagement insurers
ca n l ev era g e
tech n ol og y a n d da ta
to
erent te on
e er ence n
r ce ncre ng
the erce e
lue
of their offerings.
o
n
to
ro
rel
to ttr ct
ret n cu to
r e gre ter
ne n e
t on h
ee en
er
lue
t ng
u
r
ro
Current Preferred
Current Preferred
Current Preferred
Preferred
Preferred
Current Preferred
eCurrent
l ro
ot
on Current
Current
Current Preferred
Current Preferred
Current Preferred
Preferred
Current
Preferred
Current Preferred
G l ob a l dev el op in g ma rk ets
G l ob a l ma ture ma rk ets
Current Preferred
3 4 %
3 4 %
4 3 %
3 4 %
2 6 %
2 6 %
3 0 %
2 6 %
4 0 %
4 3 %
4 3 %
Current
2 9 % Preferred
2 9 %
2 7 %
4 3 %
2 7 %
4 5 %
2 9 %
2 7 % 4 5 %
2 7 %
3 0 %
4 0 % 3 0 %
2 7 %
2 7 %
4 5 %
2 7 % Preferred
Current
2 7 3% 1 %
4 4 %
4 4 %
3 1 %
4 3 %
5 5 %
4 3 %
4 6 %
4 6 %
4 6 4% 4 %
4 4 %
3 1 %
2 4 %
2 7 % 4 4 %
2 7 %
2 4 %
1 3 %
1 3 %
4 4 %
4 0 %
2 7 % Policy
ener
ec 2 l4 % e l
2 7 % l
ener
e l
Policyu 1 3 te%
n orl
t on ec lpromotions
n or t on
promotions
u
te
ec l ye
e lr
ener lore th n once
ye r
n orore th
t onn once promotions
ore th n once ye r
Current Preferred
Policy
nce
ye r or le
nce ye
u r or
te le
nce ye r or le
2 7 %
5 5 %
6 7 %
5 5 %
6 7 %
Current Preferred
5 6 %
6 8 %
5 6 %
6 7 %
2 7 %
5 6 %
2 6 %
4 5 %
ec l e l
promotions
6 1 %
6 1 %
6 8 %
2 6 %
4 5 %
6 1 %
4 5 %
6 8 %
2 3 %
2 3 %
2 3 %
2 3 %
2 61 %8 %
2 71 %8 %
1 8 %
1 8 %
1 0 %
9 %
1 0 % 2 3 %
9 % 2 3 %
ener l
ec l e l
1 8 n% orl
ener
8 %e l
t on ec 1 lpromotions
n or t on1 0 %
promotions 9 %
ener
e erl
en er
or t on
Current Preferred
3 8 %
3 8 %
3 0 %
3 8 3% 0 %
1 7 %
1 7 %
9 %
9 % 3 0 %
Policy
Policy
1 7 u
%
te
u
te 9 %
Policy
u
te
e er
5
T h e P a y A s Y ou L iv e
( P A Y L ) P rop osition
W h a t it is
rel t ely ne n ur nce conce t
e t
ro ng controll le
eh our to re uce re u
n re r cu to er t n ol e the
n ure er on ro ng ongo ng t to the n urer out the r l e tyle
through e t ng n ne
t ource e g e r le technology n the
n urer encour g ng cu to er to l e he lth er l e tyle to re uce the r
o chron c llne
er c n l o tr c the r o n h t through n e ly cce
le o
nter ce u ng the t to on tor n lter eh our uch
et
e erc e to
ro e he lth outco e n urer c n u e the eh our
gener te to er on l e olut on
e on he ghtene un er t n
cu to er he lth t tu n rele nt r
ctor
h n turn ro
ol cy hol er th re r
n
count
le
n
l t
ng o
e the
T h e b roa der P A Y L ecosy stem
out ore th n u t u ng e r le t to n or un er r t ng
t o er the otent l to cre te n eco y te o he lth n ell e ng rel te
goo
n er ce th t
lue to the cu to er the n urer n the
ro er co
un ty
hole
n or ng n hot o
n urer c n u e n ght
cu to er o er ll ell e ng n he lth t tu
n
t ro eco y te nter ct on or e
•
r c ng fitne
ct t e ro
•
e er g ng r
•
ye r o long tu n l ell e ng
ntegr t ng
ore co lete cu to er n hot
te he lth
e r
le
le e ce
t
t to n or
lthough o e n urer re
ng o ou l y n th
rect on
ery e h e ucce ully ntegr te n
u l he lth t to
un er r t ng eng ne to
u t re u
e on ne r c ng r
rt
le
H ow it w ork s
P ol icy H ol der
U ser I n terf a ce
I n sura n ce
U ses w earab le
dev ices to
manage
their
health
outcomes
Data is passed to insurer through
w earab le interface
Behav ioural data is included for loy alty
programs and in policy pricing
Data
U ser I nterface and communications
link positiv e b ehav iour to insurance
policy w ith price signal re- enforcing
benefits of lifestyle
6
Policy - holder changes
b ehav iour for improv ed
health outcomes and
low er premiums
I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance
Pricing
C R M
PAYL benefits
Benefits to the insurer
•
cce to ne n re l t e
cu to er t or ort ol o
r
n cl
o t
t on
Benefits to the customer
•
ortun ty to ct ely t e ch rge
o the r o n he lth n le longer
healthier lives
•
•
u to er c n tr c the r o n
l e tyle n et go l to
ro e
their habits
•
•
•
cce to re r
uch
re u
count or cce
to rtner enefit gy
memberships, healthy eating
rogr
he lthc re count
e l t e nter ct on ll
llo cu to er to ee the r
co er u to te n rele nt
or the r nee
•
Benefits to the community
•
ro e co
un ty he lth
outco e ue to he lth er l ng
•
ro ect nno t on to hel ttr ct
ne cu to er ho nt to le
healthier lifestyles
n le er on l e e er ence
to improve engagement w ith
cu to er n ee en e t ng
rel t on h to
ro e cu to er
t c ne
n retent on through
ncre e cu to er t ct on
ct ely encour ge g t l
nter ct on to re uce long ter
co t to er e
•
e uce tr n on u l c
n r tructure n re ource
e c te to the tre t ent o
chron c llne
•
e uce re u
o the c
o re uce cl
h
ll
ro e
the or
l ty o l e n ur nce
th n the ro er co
un ty
Demonstrating the greater,
oun t on l ur o e o n ur nce
co
un l r co er ge
ur o e le
7
I n troducin g th e P A Y L p rototy p e
or ng
rototy e h
een
cre te to ro e the e
l ty o th
type of solution.
h rototy e olut on h
lre y een te te
th
erent r le
n
re y or e on tr t on or ng th
n urer c n co e elo
t lore er on
te to eet the r u ne nee
n tele t c tr tegy
he
rototy e
e on the ro en
y
ou r e
n ur nce l t or
h ch h
een ucce ully e loye n uro e n
orth
er c n te o eh cle tele t c
e r le technology ro e
ly l e tyle t to the rototy e n
o le cce
le nter ce re ort
on l e tyle r le to n or
re u
r c ng he t o conce t h e
u fic ent co
on l ty or the
rototy e to le er ge u t nt l
ele ent o the ro en
olut on ee gure
or roo o conce t ur o e the rototy e
e on hy othet c l
n ur nce co
ny u orte y n ctu r l r t ng eng ne th t u e
ct ty n ut uch
r c ng r le t c n e cce e through n
nter ct e
h o r th t llo cu to er to on tor the r he lth t
n er or nce go l
th luetooth connect ty to ell e ng e ce
uch
t t
tche n electron c c le
ll te t ng
t h
een recor e to u
ort ongo ng r c ng o t
F ig ure 4
th to lue or
le er ge le rn ng ro
n other
the ucce ul e loy ent o
u ge
e n ur nce olut on
yA
Pa
t on
L ive
ou
Y
s
E volved understanding
of traditional pay as you use solution
( e. g. vehicle telematics) to build PA Y L
I nputs ( Driver)
U ser I nterface
CR M
Policy
System
Policy System
Pricing E ngine
Data
8
I nfrastructure
I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance
A s
Y o
uD
riv
e
Development effort is required
to configure the technology
for a new instance w hich takes
w earable inputs rather than
driver inputs. T he prototype
has been built to successfully
interface to w earables.
y
Pa
F ea tures
2. P erson a l ised g oa l s
•
et er on l er or
•
•
on tor rogre
1. F a st, sma rt sig n up
•
le n n
le e
cu to er on the
•
•
g ng to e uc te
ro o t on
ro
r
o er t
t go l
e
or ch e ng or e cee ng go l
3. S imp l e to use
•
hrough
e to or u er r en ly
hone nter ce
or ng ctu r l r c ng eng ne to ro e
e y u c uot ng or e le
ct t on
rect n o c ng n t ntly et u
the platform
rn re
nce
rt
•
og n to cce
er on l e
h o r th t
le
the u er through the roce
th te y
te n truct on
•
ncor or te tool or cu to er
n
ll ng
n ge ent
9
W h ere to f rom h ere?
loo ng or or r th n ng n urer to co e elo th olut on or
e loy ent to
r et hrough er e o ocu e
r nt
gure
w e w ill w ork w ith you to:
ont ct u
to cu
the potential
or e elo ng the
rototy e
in your business.
r
•
•
•
e
tr teg c fit n
ent y
or ho le
ro ch
ro r te
th to
lue u ng
efine the or ng rototy e n run e
of this solution
er
e elo the cu to er lue ro o t on
re u re ent or el ery to
r et
ro uct n o er t ng
•
ent to ro e the
l ty
o el
t e loy ent o the olut on th
n u
le ro uct tr c
enefit n cre te clo e ee
c loo or olut on refine ent
t
n e c t ng ro ect to e
r et le er through nno t on t
o eth ng our thought le er re
on te out
th only hort
n o or fir t o er
nt ge no
the t e to ct r the y ng
goes, “disrupt or be disrupted”.
F ig ure 5
ro o e n cceler te n coll or t e
ro ch to le er ge the
e t ng rototy e to e elo n l unch t lore olut on or your
r et
4
Go to
market
3
1
Launch
Solution
design
2
Strategic
Assessment and
Business Model
Design
Proof of
concept
Fee
d
n
tio
era
back
loop and it
Desired outcome
•
•
Strategic alignment
Clear path to value
•
•
•
Working prototype
Successful
experiments
Proven viability
•
•
•
10
I ntroducing ‘ Pay As Y ou Liv e’ ( PAY L) I nsurance
Customer value
proposition
Product design
and pricing
Operating model
requirements
5
•
•
•
Successful
deployment of
minimum viable
product
Data capturing
Benefits tracking
O ur P A Y L a n d dig ita l th oug h t l ea ders
glo l net or o n ur nce technology ctu r l
n cu to er tr tegy ec l t re re y to hel you
t e n en to en
olut on to
r et
W a l ter P oestch er
rtner
n ur nce tr tegy
el
lter oe tcher u ey co
R odn ey P rescott
en or
n ger
ory
el
ro ney re cott u ey co
lter he
our ce n
n ur nce r ct ce n
le ng
tele t c n t t e
er ng e ert e n
ory
o ney c n
t th the ro on
o technology er ce
R ich a rd S uh r
rtner
gt l e
el
r ch r uhr n ey co
C h ris O ’ H eh ir
rtner
ory
el
chr oheh r u ey co
ch r le
g t l r ct ce
n the
c fic th ocu on
u l ng n e loy ng ne
gt l
er ce o er ng
hr
o
er
te
J on a th a n Z h a o
c fic n ur nce e er
e o ctu r l er ce
el
on th n h o h ey co
J oel L im
rtner
ory er ce
el
oel l
h ey co
le
n lyt c n
ell ng r ct ce or fin nc l
ce n the
c fic n
le er n ctu r l er ce
11
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust
and confidence in the capital markets and in economies the world
over. We develop outstanding leaders who team to deliver on our
promises to all of our stakeholders. In so doing, we play a critical
role in building a better working world for our people, for our
clients and for our communities.
EY refers to the global organisation, and may refer to one or more,
of the member firms of Ernst & Young Global Limited, each of which
is a separate legal entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. For more
information about our organisation, please visit ey.com.
© 2015 Ernst & Young, Australia.
All Rights Reserved.
APAC No. AUNZ00000555
S1528050
ED None
This communication provides general information which is current at the time of production.
The information contained in this communication does not constitute advice and should not
be relied on as such. Professional advice should be sought prior to any action being taken in
reliance on any of the information. Ernst & Young disclaims all responsibility and liability
(including, without limitation, for any direct or indirect or consequential costs, loss or damage
or loss of profits) arising from anything done or omitted to be done by any party in reliance,
whether wholly or partially, on any of the information. Any party that relies on the information
does so at its own risk. Liability limited by a scheme approved under Professional Standards
Legislation.
ey.com