Munich Re considers gamification of life insurance

Munich Re looks to innovate in gamification

Published March 16, 2023 6:28 AM

Updated March 16, 2023 6:28 AM

1 Min Read

Munich Re headquarters in Munich, Germany. — Munich Re headquarters office in Munich, Germany.

Digital Insurance spoke with Tony Laudato, vice president of marketing and combination products at Munich Re. Laudato uses gamification, a marketing technique using games, to increase life insurance policyholder engagement. This greater engagement helps insurers influence policyholders' choices. Munich Re applies gamification of health and wellness to its life insurance coverage.

How did you first recognize the importance of gamification?

The impact gamification can have on behavior is usually the big driver. It really can start to change how people think about and act within their insurance products. Insurance is a very transactional product -- sold, hopefully never used. There's generally not a lot of back and forth between the insurance company and the insured. Gamification is starting to change that relationship. Insurers are starting to see they can change outcomes to be more positive and create longer engagement with customers.

How does gamification increase the engagement with policyholders?

A lot of gamification started around physical activity, mainly steps and step counts, and then offering up a reward structure based on that activity. We've now started to see that go further around the tracking capabilities of either your phone or smartwatch, which can build out a much more robust physical activity profile. It's far beyond steps. It can be active minutes that people are doing, even some things based on sleep. We're starting to put all that together to round out someone's overall physical profile.

Studies are being done on how advanced health metrics from these trackers will ultimately impact insurance. There's a couple of different models. There's one model of doing good things and getting rewards like gift cards and discounts from outside the insurers themselves. There's other things like the John Hancock Vitality product, where the activity is more embedded directly in insurance, leading to a discount in insurance.

It's probably early to say which of those paths is more interesting for the policyholders and customers. Part of the work getting done now is figuring out the right mix of those two to amp up that engagement, but without being so in your face that people get turned off by it. At times, there's definitely too much engagement. People are wondering why their insurance company cares so much about certain things.

How is the industry applying gamification data to life insurance risk and premiums?

It's definitely early. There's definitely interest in understanding why we underwrite risk at the time of issue with a point-in-time snapshot of what's going on in someone's life. After that point, what happens in the progression of someone's life? How does that risk change from the day you underwrote them to a couple of years after, five years after, 10 years after?

Are you able to change that outcome if things aren't going the way that everyone really wants it to? There's a great alignment of interest between policyholder and insurer. Everybody wants to live longer. Understanding what that health profile looks like over time, with the consent of the insured, is part of the program.

The next big piece is how does the insurance company share some of that information back with the policyholder so they can understand what's happening in their lives to be able to do certain things. It's one thing just to reward somebody for hitting a target. It's another thing for us to help them understand and educate them to help change the long-term outcome as well. The idea of reciprocal information sharing is going to be really important.

What are the future applications of gamification and how will it grow?

The path and trajectory it's on now, there will be more embedding of the gamification within the insurance products themselves over time. In newer distribution methods, insurance becomes more embedded in other products or services.

If insurance is sold through another product or service that's already doing gamification, it will make gamification more natural. In the health and wellness space, that seems the most natural.

There could be health and wellness products that then embed insurance versus going the other way around, where it's insurance companies trying to embed health and wellness within an insurance product.

How has your actuary and marketing experience informed your work with gamification?

Historically, actuarial science looks backwards. It looks at experience. It looks at history. What did we know and how do we make that into a forward-looking view? Gamification and the tracking of data from that can change outcomes and change the viewpoint because now it's not just snapshot views. Now you have a live look into what's happening all the time, on an individual basis.

We usually think in very large blocks of businesses and people. It's starting to change that view of how you assess risk over time, how people develop through time and how does that match what a typical mortality curve looks like – or as the world is changing so fast and we change these outcomes, we start to bend that curve.

We've never actually been able to look and see if gamification had a real-time use. You need to wait 15 years and see what happens. It's a different game and at times that does make people uncomfortable. There's new sources of data and new ways we can analyze things that are changing the science of it.

From a marketing point of view, it's about the embedded nature. That's how marketing is changing. There are new distribution channels starting to emerge because now insurance is becoming embedded in other products. That's definitely outside of the traditional way that insurance is sold, but it's a little more now insurance is getting bought, versus it being sold, which is historically how it has been.