The war over Vitality: Why Discovery is taking Liberty to court
- Liberty is using Discovery’s Vitality and Momentum's wellness programmes to provide rewards for its own clients.
- Now Discovery is taking it to court, contending that Liberty is appropriating its intellectual property.
- Momentum appears satisfied to let Discovery and Liberty slug it out.
- For more stories, go to Business Insider SA.
Discovery is taking one of its biggest rivals to court for taking liberties with its Vitality wellness rewards scheme.
The companies have traded legal papers ahead of a clash in court, which can only be avoided if Liberty stops using Discovery’s Vitality programme to provide rewards for its own clients.
Liberty does not believe it has done anything wrong. It openly markets the fact that its life insurance clients can get rewards based on their status “through wellness programmes that Liberty recognises”.
Based on their rewards status at either Discovery and Momentum, which both offer rewards programmes for their own customers, Liberty Life clients can earn up to 40% of their premiums back from the fifth anniversary of their policy onwards.
Liberty argues that the data does not belong to Discovery, but to their customers. Discovery agrees with them up to that point. But Discovery takes offence to Liberty’s use of the rewards status – which Discovery argues is the result of 20 years of product development.
“It’s about competition and freedom of choice,” says Liberty CEO David Munro. “We looked at this and didn’t think there was room in the market for another wellness programme, so we asked our customers and they told us they wanted choice, and that is what we are giving them.”
Discovery holds a different view. While it’s happy for its members to use their Vitality status on their CVs and even on social media and Tinder profiles, the fact that a rival is using its intellectual property to compete is viewed as theft. Lawyers use the term “coat-tailing” and Discovery’s legal advice is that a rival may not use its invention to compete, or ride on its coat-tails.
Liberty: We're like Uber and Airbnb
“Those profiles are the result of ten million life years of data and 30,000 mortality events that link back to it,” Discovery Life CEO Hylton Kallner says.
In a statement issued in June, Liberty's divisional head of retail solutions share valued, Nalen Naidoo said: "This is a major innovation in the way long-term insurers reward their clients for living a healthy lifestyle. We used customers' wellness measurements from Recognised Wellness Programmes, created a Liberty Wellness Score for clients and integrated this into our long-term insurance solutions. Our customers can continue to enjoy the benefits of their preferred wellness programme and enjoy the benefits of guaranteed cover from Liberty.”
Liberty says it has taken legal advice that suggests just like Uber and Airbnb, they don’t actually need to own the assets they use for the advantage of their customers.
“The difference,” says Kallner, “is that when your property is listed on Airbnb, it’s because you have requested that it be put there. If your car is being used as an Uber, you have signed up for it to be used for that purpose. We have not given permission to Liberty to use Vitality for their own benefit.”
About 20 insurers around the world have Vitality embedded into their own wellness programmes and pay top-dollar for the privilege of doing so. While Discovery does not believe its global Vitality model is at risk, there is a concern that if its life insurance rivals can simply use the results of the product to incentivise their customers, it will undermine their integrated offerings across health, investments, banking and insurance businesses.
And that is why it is going to court to defend its position. But Munro says he is prepared to fight this on the basis that it is about consumer choice. He also contends that Discovery’s attempts to block their customers from using their Vitality status is anti-competitive.
Since Liberty has provided its clients with the digital tools to capture their Vitality status, Discovery changed their own layout so that their clients’ names no longer appears on the same page as the status report.
Munro maintains his clients want to be allowed to choose preferred product providers across various offerings and any restriction of their right to do so is in itself uncompetitive.
“Having listened to the needs of financial advisers and clients, we designed the Lifestyle Protector Wellness Bonus to give customers the opportunity to benefit from significant upside when they manage their health in such programmes, but with no downside,” Naidoo said. “We believe our clients can enjoy a 'best of both' worlds scenario.”
But Discovery is refusing to allow its rival to have its cake and eat it.
For Momentum, it appears satisfied to let Discovery and Liberty slug it out. It faces no downside risk. “Momentum has no intent to pursue legal action against Liberty but we are monitoring developments,” said Johan Kleu, the executive head of Momentum Multiply.
Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.
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