- First National Bank's life insurance business is raising the maximum it will repay customers, in eBucks, from 15% to 40% of their premiums – for those at a high enough reward level.
- Based on an extensive investigation of FNB customer data, the bank says, it has determined that those with a higher eBucks level manage their health better, and so live longer.
- FNB doesn't actually measure health in any way, only how customers interact with the bank.
- The use of financial behaviour as a proxy for how long you are likely to live comes amid a bitter battle as the Discovery Group tries to fight off Liberty's use of Vitality status in selling life insurance.
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First National Bank says it can use the level its customers achieve on the FNB eBucks rewards scheme to estimate how long they will live, at least roughly.
FNB Life this week announced it is now offering its life insurance policyholders up to 40% of their premiums back, in the form of eBucks – for those on the top tier of the eBucks scheme. Others, at lower eBucks levels, will see smaller cash-back payments.
But those payback levels are not just discounts, of the sort FNB offers on flights and other purchases. The bank says those on a higher eBucks level manage their health better, and so tend to live longer, making for a longer period during which they will pay life premiums before dying and triggering the policy payout.
See also: Discovery Vitality stopped it giving away R500,000 in free Ster-Kinekor movie tickets per month, Liberty says – and Virgin Active was bullied too
"We are able to prove a significant correlation between people's health outcomes and their eBucks level," FNB Life CEO Lee Bromfield told Business Insider South Africa.
"That is something that holds up statistically."
FNB does not have access to health data for its customers, Bromfield confirmed. It doesn't get heart-rate data directly from wearable fitness monitors, it does not know what its customers go to the doctor for, and it does not know if they are getting HIV or cancer screenings.
But FNB does know when its customers die, and it has many customers. So the bank ran an analysis across that entire customer base, and found that those on eBucks level 5 tend to live longer than those on eBucks level 1.
The bank was "quite surprised" at that result, Bromfield said.
South Africa's best-known wellness scheme, Discovery Vitality, is based on health behaviour, with a level determined by factors such as how often you exercise, what kind of preventative health screenings you participate in, and how healthy you eat.
Your eBucks reward level, on the other hand, is determined by how you interact with FNB. Requirements to qualify for the rewards scheme and move up the ranks include using FNB's online channels to bank, investing or borrowing certain minimum amounts of money, and even appointing FNB as the executor of your will.
Nonetheless, said Bromfield, FNB and its re-insurers are satisfied that the eBucks level which measures how you do business with FNB is a valid proxy for how long you are likely to live, and it is willing to put money behind that assertion. Specifically, any of the four million FNB Life policy holders on level 5 of eBucks will now be getting back R400 on every R1,000 they spend on life insurance, up from R150 under the previous rules.
Meanwhile, Discovery and Liberty fight about Vitality
FNB Life's rule change comes in the middle of a nasty battle between the Discovery Group and competitor Liberty about measuring how likely people are to stay healthy – or die.
Discovery is taking Liberty to court to demand it stop using their shared customers' Vitality status to calculate cashback payments to customers.
According to court filings, Liberty offers up to 40% back to customers on the top tier of Vitality – which happens to be the same as FNB's new maximum eBucks repayment offer.
Vitality seeks to change people's behaviour around their health, encouraging more exercise and other good habits. This, Discovery says, reduces costs for the non-profit Discovery Health Medical Scheme that is administered by the for-profit Discovery health. Another Vitality client is the Discovery life insurance business, which says the highly complex calculations involved in Vitality also allows it to better estimate who is healthy – and will stay alive for a while yet – and who is not, and won't.
Liberty, the Discovery group now charges, piggy-backs on the back of those Vitality calculations by asking people to take screenshots to prove their Vitality status. Liberty assumes that those on higher Vitality levels are healthier, and so offer them more of their premiums back in cash after a period of time. It has no formal relationship with Vitality, or the Discovery group, and does not pay for that service.
In court papers seeking to stop Liberty's piggy-backing, Discovery Life says it feeds data on the deaths of its clients back into the Vitality system to help refine it, while Vitality also draws data from medical claims Discovery medical scheme members lodge.
Creating this system has cost R1 billion, Discovery says, and running it costs R400 million a year – not including the benefits such as free coffee and reduced gym fees Vitality provides its members.
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