Finding value in digital health services

By integrating health and wellness propositions into their offering, financial institutions and insurers can address pain points in their services and make their offerings more attractive to consumers. dacadoo’s Manuel Heuer explains how.

The concept behind dacadoo originated when the company’s CEO Peter Ohnemus was ski mountaineering. He could feel he was progressing physically but wondered if and how he could quantify his progress. Coming from the database business, this desire to capture a numerical value was not new to Ohnemus. He had also created a sustainability index rating. Now, he wondered how can a health score that considers many variables be created.

Manuel Heuer, chief operating officer, said, “This is how the idea [for dacadoo] was born. To create a health score to quantify this intangible nebulous thing of health, which is a complex thing with so many variables, to really simplify this into one number from zero to one thousand.”

The initial reaction to this concept was scepticism. Heuer said when Ohnemus started he was told by the professors he approached that this would not be possible. However, after some reflection, they came back and were hooked. They were able to gather medical evidence, “glue it together” and create a risk-based score, expressed as a number. Around that, a complete digital health engagement platform was built with a variety of motivational features (gamification, social, automated coaching, economic triggers, etc.) to nudge users to adopt healthier lifestyles.

The problem this concept helps to solve for users, Heuer said, is to “give people something back” based on all they could do to improve their health and lifestyle. “So that they have a consolidated quantification of their health and lifestyle: body, mind and lifestyle (incl. exercise, sleep, nutrition, and stress).”

The link between health and wealth

Health and wealth are highly correlated, Heuer said. “If you have a better financial standing, you have more money to spend on your health and improving your wellbeing.” Conversely, a family unit on a low income where two parents need to work full-time, for example, are more likely to opt for less healthy, processed foods for economic reasons, thus negatively impacting their health.

This link is not always well understood, particularly at the lower levels of income. Moreover, Heuer said, “There is a level of illiteracy, of how to cook healthily for example or how to understand its financial wellbeing. We need to help educate people for their physical and financial health. Solutions like ours can help increase this level of literacy, to equip these individuals with the knowledge to help them navigate the challenges of life, at any income.”

In the wealth management sector, more companies are looking to launch health and wellness propositions, Heuer said. “In the insurance sector, the financial side is also interesting because typically a life insurer is also interested in wellness.”

The banking industry in particular is “really starting to look into this,” Heuer said. “Because banking in many countries, and many regions of the world, is often a distribution outlet, or partner, with insurance companies. So, they often distribute insurance products or pension products to their clients.”

Health and wellness propositions are also of increasing interest to banks and insurers because they present an opportunity for them to differentiate themselves in the market. According to Heuer, these propositions allow firms to upsell, offer a differentiated service, and thus improve long-term customer retention and loyalty. To remain attractive to clients in the long term, firms in wealth management and insurance industry would do well to integrate health and wellness propositions.

Delivering value globally

dacadoo describes itself as both a HealthTech and InsurTech solutions provider. It offers its digital health engagement platform in over 18 languages. Its system uses motivational techniques designed by behavioural science experts, also drawing inspiration from online gaming and social media to “make health engagement fun”.

The company’s AI-based coaching offers automated user engagement and support and can be white labelled or implemented through its API for extra customisation. dacadoo also offers health risk quantification based on over 300 million person-years of clinical data. Health quantification can be applied for dynamic pricing or accelerated underwriting for life and health insurers. With this information, dacadoo aims to empower insurers to issue policies not only with speed but with confidence and precision.

Last year, dacadoo entered into a global partnership with HSBC Life, the bank’s insurance arm, with the goal of helping customers improve and maintain their physical, mental and financial wellbeing. Heuer said the company is currently rolling out a solution where dacadoo’s digital health engagement platform is integrated into its banking apps, and this will be available to both corporate and retail customers.

Speaking on the partnership, the CEO of HSBC Life and Insurance Partnerships at the time, said, “HSBC Life is focused on providing customers with the right products, services, and rewards to boost their holistic wellbeing. Helping our customers make the shift to healthier lifestyles is a key strategic priority for us. Our partnership with dacadoo, and our uniquely integrated approach to health and wealth, will enable our customers to take even greater control of their physical, mental and financial wellbeing.”

Looking to potential future partnerships, Heuer said dacadoo has also signed a client in the APAC region, with interest also in Europe and North America. “We are a global company. We have a lot of business in Asia, but also in America.”

More partnerships to come

According to Heuer, we are likely to see more partnerships and collaborations between digital health service providers such as dacadoo and banks, FinTechs, and insurers, and these can provide significant value to the industry.

“For insurance specifically, they face customer loyalty and customer engagement challenges. Insurance is quite a boring proposition, there is no emotional bond, especially in life insurance. There is no relationship between the client and insurer, except for the handling of the invoices or premium. So, anything that makes the proposition more attractive and more personalised, will likely increase customer loyalty and engagement.”

In addition, Heuer said a more digital-native population is increasing the need for digital propositions. “The insurers need to change the proposition completely from a paper-based one to a digital proposition on a smartphone, providing immediate coverage.” This on-the-spot coverage, also known as accelerated underwriting, is only possible digitally.

Could this impact life insurance negatively?

Digital health engagement services can help insurers improve their underwriting, based on the data it can provide. However, in the long term, if users are making healthier lifestyle choices, could this then impact the number of claims made, and thus negatively impact insurance?

Heuer said there are two aspects to this question, because there are two different businesses: health insurance, and life insurance. In health insurance, regulation in every country is very clear, Europe especially. Many countries have a solidarity principle whereby in mandatory insurance you are not allowed to use incentives for healthy behaviour, and then reward individuals. This would be an unjust system for the less privileged or those with conditions or diseases. “Those laws and regulations are a political decision. We can only play within the limitations of the law and privacy rules such as GDPR.”

In private insurance, Heuer continued, there are some incentive and bonus schemes that are in place. “Sometimes users can get their gym or other subscriptions reimbursed, and in these settings, the law permits solutions such as ours whereby you can earn points for healthy behaviour.”

On the life insurance side, it is different, Heuer said. “The regulation is also very clear, there are many things one can and cannot do. Typically, on discrimination for example the law is very strict. But then also you are allowed to use incentive schemes to motivate populations to be healthier.”

This is actually of great interest to insurers, Heuer continued. This is because traditionally in life insurance, the insurer gets a very limited amount of data about you. “They underwrite you at the point in which you become an applicant. But then they don’t acquire any further data points. You could be healthy, walking every day and being mindful of your nutrition. But you could also be smoking cigarettes every day and drinking every weekend to collapse.”

Therefore, this inclusion of lifestyle data into the calculation of the premium is providing additional insights to the insurer. “This then becomes what we call the something-for-something economy. If you are a client are willing to share some data with your insurer, then you’re entitled to get something back. This could be a discount code, or whatever is in the ecosystem that is being built. The main goal is to improve and maintain the health of the population you are managing and reduce risk,” Heuer said.

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