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CEO and Managing Director of AIA Australia, Damien Mu, says the health insurance industry needs to urgently redirect its focus upstream, to help tackle the country’s health burden, which data shows is largely preventable.
Speaking ahead of the Health Insurance Summit, Mr Mu said that, alongside digital health, prevention was the sector’s best value-for-money investment, particularly in the face of rapidly increasing care costs.
According to data from PwC’s Health Research Institute, healthcare costs are projected to rise by as much as 8 percent in 2025, marking the highest increase seen in the last thirteen years.
At the same time, statistics suggest a significant increase in the prevalence of chronic diseases by 2025, particularly in the areas of diabetes, dementia, and other age-related conditions.
As populations age and lifestyle factors remain prevalent, there are also growing concerns around multimorbidities, which are harder and more costly to manage.
While improving care affordability is still important, the future of the health insurance industry will be in jeopardy without equal focus on reducing the need for treatment, Mr Mu argued.
“We cannot tackle this issue with better care affordability alone. As insurers, one of the most significant roles we can play is in the prevention space,” he said.
Customer incentives are the way forward
To improve the health of its customers, AIA has a number of incentives through its health and wellbeing program, AIA Vitality.
This personalised, evidence-based program supports people to make healthier lifestyle choices.
For example, AIA Vitality provides in-app and in-person health assessments that compare users’ physiological age with their chronological (actual) age.
Physiological age is calculated via a range of indicators including blood pressure, cholesterol, physical activity levels, waist circumference, body mass index (BMI), alcohol intake and smoking status.
Each assessment offers users personalised feedback and recommendations for making small healthy changes to improve health and reduce lifestyle risk factors for chronic disease.
Additionally, the apps offer discounts and cashbacks from program partners when users engage with them.
Users can earn points for healthy behaviours, and in doing so, build up their health ‘status’ on the app. The higher their ‘status’ the greater the rewards they can unlock, including reduced insurance premiums.
“We incentivise people to understand and take measures to live healthier lifestyles,” Mr Mu said.
“This benefits customers, as they can enjoy better quality of life. It also benefits our business, through reduced claim costs. And for the community more broadly, a healthier population, means improved productivity, and reduced government spending on healthcare.”
More innovations are needed
As a health and life insurer, AIA Australia is uniquely placed to innovate in the healthcare prevention space. However, Mu says the current regulatory environment stifles much of the sector’s innovation potential.
“Our biggest pain point in health insurance is the design of risk equalisation. It doesn’t incentivise preventative efforts, as a proportion of the cost savings is effectively redistributed to other insurers.
“Instead, the Government could incentivise funds that are investing in member health and wellbeing programs that have tangible clinical outcomes, and allow risk equalisation payment reductions in support of prevention and wellness,” he said.
Join the debate
Sharing more of his views on this subject, Damien Mu will join a line-up of expert panellists at the upcoming Health Insurance Summit, hosted by Informa Connect.
Joining him on the panel are Ed Close, Chief Executive Officer and Managing Director of NIB Group and Dr Rachel David, Chief Executive Office of Private Healthcare Australia.
Key topics to be discussed include:
• Private hospital reforms and the Private Hospital Health Check
• Innovative models and flexibility in delivery of care
• Enhancing product design and improving claims processing efficiency
• Integrating emerging trends into value propositions and bringing it to consumers
• Where will the industry go next?
The gathering will host representatives from:
• Private health funds
• Private healthcare providers & hospitals
• Public health providers & hospitals
• Federal government
• State government agencies and departments
• Medical specialists and clinicians
• Health services companies
• Medical device companies
• Consulting and advisory
• Actuaries
• Health insurance agents and intermediaries
This year’s event will be held 23-24 June at the Crown Melbourne.
Learn more and register your tickets here.
About Damien Mu
Damien’s joined AIA Australia in 2007, and was appointed to the role of CEO in 2014. In 2021 Damien was awarded Insurance Leader of the year at the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) Insurance Industry Awards. He has also been awarded Shared Value Champion at the Shared Value Awards and the Australian Banking & Finance (AB&F) Australian Insurance Executive of the Year in 2018, 2017 and 2016.
Damien holds a number of directorships including as Co-Chair of the Council of Australian Life Insurers (CALI) and previously was a Director of the Financial Services Council.
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