Even as the U.S. economy teeters on the brink of a recession, employers face a historically tight labor market and must compete for talent in new and creative ways. While competitive salaries are critical to attract and retain workers, company benefits often make the difference for companies trying to demonstrate that they value their employees and care about their physical, mental and financial health.
For insurance companies, the increased focus on wellness represents a compelling growth opportunity. It’s also a win-win-win: Insurers that can help employers boost employee satisfaction and loyalty and promote healthier lifestyles for individuals will also benefit their own bottom lines. The substantial benefits to society should not be overlooked, either; the already massive and rapidly expanding retirement savings gap and the combination of longer lifespans and medical inflation place huge strains on government-sponsored programs. Stronger physical and financial wellness programs, when combined with traditional life and health policies, can certainly reduce that strain.
Consumers are more interested in wellness than ever before. Capgemini research has found that large majorities of consumers want to improve their physical (69%) and financial (67%) wellness. And nearly as many are taking action to achieve that goal; 66% say they act on physical wellness (e.g., exercising, monitoring their diet, tracking health metrics), and 63% on financial wellness (e.g., budgeting, tracking expenses, saving for a long-term goal).
And the stakes around financial health will only increase during the coming economic stress. Employers certainly recognize the urgency, given the impact of financial stress on absenteeism and worker productivity. According to the Society for Human Resource Management, nearly 80% of companies believe financial stress hurts their employees’ productivity. Other studies have shown how financial stress increases absenteeism. Given the relatively low levels of financial literacy among U.S. workers, education is also key.
Moving the needle on wellness
So how can insurers best respond to these powerful market forces? The key is to develop innovative solutions, such as wellness-as-a-service programs that address shifting consumer needs. Extensive education and useful tools are also critical to support and empower individuals to meet their unique goals. For insurers, wellness-as-a-service models provide deeper understanding of customer behaviors, the opportunity to engage more frequently and the ability to deliver personalized services. The long-term goals – higher levels of physical health and financial security – will pay off in the form of reduced claims volumes, more accurate assessment and more profitable pricing. It’s a powerful formula for near-term growth and long-term success.
To be clear, many insurers have developed robust programs that promote healthier behaviors, with an emphasis on physical fitness, healthy eating and preventive care. These programs typically feature tailored prompts and reminders to exercise with motivational content and incentives for consumers that meet their goals. Relatively few insurers have applied these same behavioral techniques into their offerings for financial wellness. Consider how information and guidance for protection products, savings plans or investment options could be personalized based on key life events (e.g., getting married, having a child) or career stages (e.g., workers nearing retirement age). Wellness-as-a-service models are designed to produce great outcomes by closely integrating physical and financial wellness programs.
Embracing an innovative and holistic approach
Wellness-as-a-service is a flexible model that focuses on three core priorities for physical and financial wellness:
- Achieving physical wellness by helping consumers access emergency and regular medical care and establishing financial wellness by meeting current financial needs
- Preventing future medical issues (e.g., by promoting adherence to prescriptions and fitness routines) and financial emergencies and preparing for unexpected expenses (e.g., through savings prompts and information on income protection)
- Improving long-term physical and financial wellness through continuing advice about nutrition, exercise,\ and financial planning options, among other topics.
It’s a compelling opportunity for insurers that are looking for ways to increase their relevance to consumers’ lives and seeking to make inroads in the employee benefits market. But, according to the inaugural life and health insurance report from Capgemini, only 8% of insurers have established effective wellness-centric value propositions and built the necessary capabilities to execute on wellness-as-a-service strategies.
Realizing the benefits requires insurers to gain a deeper understanding of customer needs and expectations and to build the capabilities to act on such insights. Firms that get it right will be able to evolve from today’s focus on infrequent and standalone transactions toward engagement models based on stronger relationships and hyper-personalized experiences.
Tailored communication and more frequent engagement will feed a virtuous circle of relationship-building, wherein insurers can enhance even basic transactions with personalized messaging and offers. Engagement will include specific touchpoints:
- Relevant data monitoring and status updates, including health tracking and expense management
- Delivery of personalized, goal-based nudges such as actionable health tips and recommendations, savings tips and retirement planning suggestions
- Customized planning through regular touchpoints such as medical check-ups and portfolio rebalancing advice meetings
- Hyper-personalized motivational tactics, with tangible and individualized incentives and rewards to customers following tips and advice and meeting goals
Insurers must also design and deploy the modular, data-driven and platform-focused technology architectures that enable sharper behavioral insights, stronger analytics capabilities and more pervasive use of artificial intelligence, machine learning and the cloud to deliver these customized experiences. Establishing sophisticated wellness-as-a-service models will not be easy, but we believe the potential upside more than justifies the necessary effort and investment.
The global pandemic certainly heightened awareness of mortality and the need for greater financial security. It also clarified the intricate links between physical and financial health. Insurers are well-positioned to improve both dimensions of wellness because, as our research indicates, customers consider insurers as trusted advisers and providers for both physical and financial health.