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Perspective

How Biological Age Could Help Insurers Improve Customer Relationships

July 07, 2016| By Francisco Garcia | Life | English | Español | Deutsch

Ageing is an innate and often emotional process. We generally sense our own ageing in a visceral, illogical way; for example, we could feel rejuvenated by a healthy diet or regular exercise. In fact how we feel could reflect our biological age, which may better indicate our current health status by taking account of improvements and deterioration, than chronological age that increases continually and incrementally.

Biological age can significantly influence our behaviour; for example, motivating us to take steps to improve our health or change habits. Informing a smoker aged 50 that his habit has increased his biological age to 65 is more likely to hit home. Messages about the years of life that could be regained as a result of quitting smoking are likely to have more success than dire health warnings. Adding graphic images to cigarette packs showing the harm that could be caused may not deter some people because such messages engage people’s logical reasoning, which isn’t always as effective as appealing to their emotions. (Read Ross Campbell’s blog Cigarettes - What’s Your Poison?

The concept of biological age could be combined with trends in digital health to create new opportunities for life insurers. Wearables and mobile apps can also help individuals to improve their health - by tracking and monitoring exercise or nutrition, for example - and to see achievements. Many apps have come up with systems that help them derive health scores. An improved health score can be quantified and reflected in a reduced “biological age.”

Biological age could also help better explain premium increases. Rather than highlighting an excess mortality risk or reduced life expectancy, telling applicants that their health status means they are biologically older than their chronological age may help soften the blow when applying an extra premium.

While changing the policyholders’ perception of messages, referring to biological age - when coupled with wearables or mobile apps - could also improve customer relationships by increasing interaction with the insured on a regular and ongoing basis. Generally, policyholders' only contact insurers comes when facing disability, serious illness or the death of a loved one. Increased interaction could represent an important shift in how life insurers and their customers relate in future and provide insurers with better insight into customers' behaviour and needs.

This may not only increase customer loyalty, but with increased knowledge of customers’ needs, tastes and preferences, it may furnish a wide range of possibilities for updating and improving the products and services offered to them - and for developing new ones for them. The growing desire for more personal control over health also opens the way for insurers to incorporate health management-related services into their products, to market “fitness” and “healthy” products, to use games involving rewards for physical activity, and much more.

Basing insurance around biological age is particularly appealing to people who already have healthy habits and whose lower biological age may be rewarded with premium discounts. Similar to the concept of “pay as you drive” in motor insurance, life and health insurers may in the future offer "pay as you live" policies.

Whatever the future holds, intelligent use of the concept of biological age - combined with new technologies - represents an opportunity for life and health insurers to boost and influence relationships with their clients.

Read my other two blogs on the concept of biological age – how it might influence the insurance is priced in the future and how it might affect life expectancy calculations.

 

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