Redefining health insurance
The departure of millennials from the private health insurance market has left many health insurers wondering where they went wrong, with millennials left feeling uneasy about a lack of self-protection when it comes to health, wellbeing and personal finance.
In tandem with this, the sectors hardest hit by various government restrictions and shutdowns have disproportionately affected young people and, unlike the baby-boomer generation, many millennials do not currently have the asset base to invest in their protection during this time.
Roy Morgan recently developed a segmentation based on high-value, big-spending young consumers aged between 14 and 36. The research found that neo-millennials — the generation of individuals born after the early 2000s — are an important potential market for private health insurance, with an audience of just over two million and only about half (54.4%) currently covered by health insurance.
Millennials are dropping their insurance due to concerns about cost and value, but research such as this demonstrates the potential opportunity for insurers. The situation begs the question of what we can be doing as an industry to break down the barriers and refresh our approach so that this age bracket is reassured that health insurance is a worthwhile investment, especially in the changing context and circumstances resulting from the pandemic.
At AIA Health Insurance, we are working to educate millennials and Gen Zs on the importance of safeguarding health before hitting 40. We want to change the perception that insurance is non-essential, expensive, and largely a luxury only relevant for their parents and baby boomers. Age and health are large drivers for health insurance policy cost and it is our job to close the health insurance age gap by providing relatable, accessible and affordable protection that drives deeper value into consumers’ pockets.
How? With COVID-19 restrictions posing challenges to our everyday lives, our AIA Vitality program helps people better understand and improve their health and wellbeing. In terms of appealing to millennials, AIA Vitality supports and incentivises members to make small changes that will lead to significant health improvements over time — with benefits that are in the sweet spot for this generation (examples are an Apple Watch offer, shopping rewards from a host of amazing retailers like Endota Spa, Jaggad, Fitness First and Fitbit, and flight rewards).
During the pandemic, we have been looking at how we can help people’s mental and physical wellbeing in small ways every day — we have funded a mental wellbeing app called Mentemia that is available to all Australians for free until November; we have developed an at-home fitness and wellness toolkit aimed to provide our members with health and wellbeing inspiration during lockdown featuring our AIA Vitality ambassadors, like Laura Henshaw and Chris Judd; we’ve recently launched a mindfulness hub as part of AIA Vitality; and we are providing mental health coaching via teleheath and free online cognitive behavioural therapy.
On the financial side of things, we are leveraging a new economic value lens to increase consideration amongst price-sensitive millennial switchers who readily cherrypick health insurance through online aggregators. For example, in July we launched a ‘market first’ cash refund initiative to give back to members who have faced restricted access to extras services such as dental, physio and optical due to the global pandemic. Essentially, the initiative puts money back in members’ pockets to support their financial wellbeing during this challenging time for society. By way of example, a Platinum AIA Vitality member who makes no extras claims from April to December this year would receive 100% of their extras premium back in their pocket, which is a big saving.
As champions of healthier, longer, better lives, it is our job as a health insurer to bring an insurance offering to millennials that levels out the age gap in health insurance and improves the health and wellbeing of younger cohorts. AIA Vitality is critical to this strategy — along with other measures in place — and we look forward to continuing to evolve our offering as we move into 2021.
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