A brief history of shared value

How Discovery’s shared-value model has shown to be remarkably successful in addressing some of society's greatest challenges

When I joined Discovery in 2001, as co-founder and head of product development in its Life Insurance business, we were presented with a challenge: How do we inspire people to be healthier?

At the time we had set out to disrupt the life insurance industry by providing products that had a profoundly positive impact on society and we knew that if we could crack this problem, we could build something truly remarkable.

The reasons for this are rather intuitive; healthier clients are less likely to claim on their life insurance policies. The fewer payouts that the business incurred, especially for death, loss of income and disability, the more sustainable it would be.

However, life insurers before us had tried, and failed, to incentivise the types of behavioural changes that would achieve the optimal health outcomes. As improving one’s health is a long-term goal, which comes with long-term benefits, insurers have struggled to tie these outcomes to their short-term financial imperatives.

The breakthrough that we achieved was in finding a way to convert the unrealised future economic value of healthy behaviours, into tangible benefits for clients in the present.

Initially we offered clients a 15 to 20% discount on their life insurance premiums. We then incentivised our clients to engage with the Discovery Vitality programme, thereby enticing them not to give up on some of the benefits. The result was that if you got healthier, and your underlying health risks improved, your premiums would go down further, but if you did not look after your health, your premiums would increase.

For a young life insurer, this dynamic approach to life insurance, which evaluated and incentivised clients’ evolving state of health over time, proved to be an incredibly effective model for disrupting a dull and static industry.

We soon realised that the behaviours we were incentivising were not only good for our business and great for our clients, but they were remarkably effective at tackling a notable social challenge.

Throughout our years of pioneering this shared-value insurance model, we have come to know that there are four lifestyle behaviours responsible for diseases associated with most deaths worldwide – not getting enough exercise, not eating properly, excessive alcohol consumption and smoking. Modify those behaviours and you can help solve for early and preventable deaths in society.

Independent research has shown that clients engaged with Vitality have an average life expectancy that substantially exceeds that of the wider insured population. We sometimes joke that our Diamond Vitality members, who have an average life expectancy that is higher than in some of the most exceptional pockets of human society in the world, ‘live forever’.

Shared value: Replicable and scalable

Perhaps the most remarkable thing about shared value is that it is a model that can be replicated across multiple industries, as we look to tackle multiple grand-scale social challenges.

In the space of Life insurance and Medical aid, the behaviours we try to influence are clearly related to physical wellbeing and this has translated into our clients enjoying longer lives. In short-term insurance, we are using incentives to help people to become better drivers, with the result that our clients experience less harsh road incidents. In banking, we are helping to inspire the right kinds of personal finance behaviours that prevent social problems such as over-indebtedness.

Another grand-scale challenge that we face as a nation today is the sobering reality that 94% of South Africans do not currently have enough savings to retire comfortably. This is a problem that is exacerbated by the profoundly positive reality that people are living much longer today than in previous generations.

Discovery Invest, now South Africa’s fastest-growing investment firm, has achieved incredible traction by deploying shared value to address the behaviours and biases that undermine sound long-term investing strategies. Powerful boosts to the effective value of investors’ funds reward clients for the right investing behaviours and have proven remarkably effective at helping clients stay on track to meet their long-term investment goals.

Our holistic Employee Benefits solution combines our 20 years of shared-value innovation to help employees achieve both physical and financial wellbeing.

We have found that employers really love this message – great employers feel a strong sense of social responsibility towards their staff. Moreover, happy and healthy employees are more productive and resilient, adding further benefits to employers, and ultimately, society.

It has been a transformative, pioneering, and incredible 20-year journey for me at Discovery thus far. I look forward to the next waves of disruptive innovation through shared value.

For more information, read the Employee Benefits brochure and the Employee Benefits Discoverer launch issue.

ENDS