Health and Wellness programs could increase sales and reduce lapses

The latest Health and Wellness Report jointly published by Strategic Insight (Plan For Life) and Direct Insights, identifies major opportunities which Health and Wellness programs have the potential to provide to Australian Life Insurers.

The Report identifies areas where Life Insurers need to focus to improve sales, improve retention and reduce claims.  For example, to improve sales, Life Insurers must look to create advocacy, building client and adviser support, and thereby create widespread awareness of the program.  In addition, providing differentiation in applying the program gives advisors a significant entry point to first discuss and then make recommendations to the client.

“The potential impact of Health and Wellness programs, if fully and properly applied, can usher in substantially higher sales and markedly reduced lapses.  There is a very real opportunity for Life Companies to materially improve product profitability,” said Simon Solomon, Actuary, Strategic Insight.

Some major opportunities based on Strategic Insight Actuarial modelling, are discussed in the report and include: 

1. Improved Sales

Growth in new sales of Individual Risk Business has been virtually static in each of the last 3 years up to 30th June 2016 and In-Force Business has been growing, but only at a very sluggish rate.  If Health and Wellness programs could be utilised to generate even a fairly small, additional 2.5% growth in sales, this would produce nearly $50 million new annual premium and, if this were built on, year by year, the level of Industry sales would quickly move beyond the $2 billion mark.

2. Reduce lapses and Improve policy retention

A reduction in lapse rates due to Health and Wellness programs could have the effect of major savings of lapsed premiums.  If lapse rates on existing In Force at 30/6/16 could be reduced by 20% in each year onwards, coupled with a 20% reduction in each tranche of new business, the result would be a huge improvement in both retained premium and profitability.  The impact of additional premium from a 20% reduction in lapse rates for Lump Sum and Income Protection (combined Advised and Direct markets) over several years, is estimated at around $233 million in just one year.

For more information:

Stephen Ryan-Gledhill
Business Development Manager
Ph:  03 9886 4400

Source: Strategic Insight (Plan For Life)