JOHANNESBURG – John Hancock, one of the largest life insurers in the United States, wants to change the way Americans think about life insurance and believes that Discovery Vitality is the key to doing that.
“I’ve never seen our sales and internal people quite as excited as I’ve seen them over this,” says Greg Mack, senior vice president of sales and distribution at John Hancock.
“Manulife is looking at it [Vitality] right now and is obviously very interested in it as well,” Mack adds.
Manulife Financial is John Hancock’s Canadian-based parent with a market capitalisation of around C$42.4 billion and earnings of C$2.9 billion in 2014. It serves millions of customers across Asia, the US and Canada.
The first US life insurance company to offer behaviour-based premiums, John Hancock plans to use its Vitality programme to grow its customer base.
Having launched the ‘Vitality rider’ to clients about six weeks ago – which enables those aged 20 to 70 to add Vitality to their life policies for a flat fee of $24 a year – Mack says that already around 25% to 30% of John Hancock customers have taken it out.
Similar to the Discovery Vitality tiers in South Africa, John Hancock has four tiers – the highest being platinum – that are based on how healthy a client’s behaviours are. Discounts vary from around 5% to 15% and Mack says that three different clients took as little as a day to achieve gold status, by going for the requisite medical checks and filling in a form online. They will now enjoy a 10% discount on their life insurance premiums for the next year.
Since the launch, Mack says 260 people have called John Hancock to buy life insurance policies with the Vitality rider, which alongside premium discounts for healthy behaviours such as exercise and medical checks, offers discounts on hotel stays, vacations, clothing stores and healthy foods.
Mack says John Hancock is looking to offer gym discounts too and would like to extend the types of products on which the Vitality rider can be added, including its long-term care insurance product for example, which is similar to an income protection policy.
According to US-based research firm LIMRA’s 2015 Insurance Barometer, about 40% of US adults (18 – 75) had no life insurance cover in 2014.
The US life insurance market is highly fragmented and John Hancock holds 3.4% of the insured market, according to SNL Financial, which estimates life and health insurers wrote $560.3 billion in premiums in 2013. John Hancock’s share amounted to a little more than $19.2 million. The largest writer of direct premiums, SNL’s data shows, is MetLife Inc. with a 15% market share, while Prudential Financial comes in second with a 7.3% share.
While its market share is smaller – Mack notes it sells around 6 000 policies a year, at most 10 000, with competitors selling in the region of 30 000 to 40 000 – John Hancock’s average policy size is just under $900 000 on a death benefit, Mack says.
Declining to provide details on the profit share arrangement with Discovery, saying only “we pay Vitality for the policies that we sell”, Mack says the relationship is “exclusive both ways”.
Having burnt its fingers with an early entry into the US as a standalone health insurer, Destiny Health, back in 2000, Discovery may just have found the perfect match.