The protection industry should base more products on a “shared-value” model in order to change people’s habits, as most diseases have become behavioural, according to the chief executive of VitalityLife.
Herschel Mayers, who since 2018 has also headed up VitalityInvest, says a “shared-value” model allows his clients to become healthier while claiming less.
He is referring to Vitality’s healthy living programme, which is open to all of the provider’s clients and gives policyholders incentives to change their behaviour and improve their health.
“We share the additional value with policyholders [as well as] the financial benefits, and, as a result, society does better. The shared-value approach means people become healthier and claim less,” he says.
For example, doing more exercise in a day and recording it on the app could entitle clients to a free Starbucks coffee and Amazon Prime discounts.
“The Vitality programme gives you an incentive to change your behaviour and improve your health, which includes both short and long-term incentives,” Mr Mayers adds.
He says the shared-value concept comes from Harvard University professor Michael Porter’s theory. “The model creates an added value that the customer did not enjoy until they changed their behaviour for the better.”
The chief executive entered the protection industry after qualifying as an actuary in 1986 when he was living in South Africa. He joined Discovery in 2000 to launch Discovery Life, the company’s life insurance arm. A joint venture between Discovery and Prudential led to the birth of PruLife, which later rebranded to Vitality.
VitalityInvest was launched in 2018 and it covers savings for retirement, pre-retirement and junior retirement.
Mr Mayers says the shared-value model can also be applied to VitalityInvest. “You can change people’s behaviour for the better in the savings arena. It adds an incentives boost if you save sooner. Whatever that fund grows to, we will give you additional incentives and increase that value by 15 per cent.”
He adds: “If we get people to save sooner, we have got additional value. We have got assets under management for a longer period of time, and we are earning fees for a longer period of time. We share that added value with the policyholder.”
But how can financial advisers benefit from the shared-value model?
Mr Mayers says advisers benefit as they can use the savings clients make on their premiums to convince them to buy additional cover, and hence earn more commission.
He explains: “If you are paying £10 less, the adviser can use that extra £10 and buy additional benefits – for example, disability cover, life cover. Advisers can sell a bit more, give a better product, better advice and value proposition. You get a 20 per cent reduction, but you end up buying more things, for cheaper and better value.”
Perhaps because Mr Mayers has worked in the protection industry for more than two decades, it may be unsurprising that one of his hobbies is keeping fit and healthy. His other interests include reading and travelling. “I love the challenge and stimulation about my job and I love coming to work. But I hate bureaucracy,” he says.