Risk, value, vitality: The moral economy of a global behavioural insurance platform

Abstract

Imagine your insurer were an ‘active life partner’, even a guardian of your future, which engaged with you on a regular basis, through a complex system of digital technology and behavioural science, to ensure you were leading the healthiest, longest, most valuable life possible. This is the foundation for a growing model of ‘behavioural insurance’ that has become a major approach in the industry. By capturing constant streams of data about consumer behaviour, and creating incentive programmmes to modify how people behave, insurers hope to unlock a key source of value and risk management. We critically analyze this model through a detailed case study of a world leader in behavioural insurance: Discovery Limited and its Vitality ecosystem of data-driven, behaviour-based, interactive wellbeing programmes for life/health insurance. We detail the behavioural theory of risk and the moral economy of ‘shared value’, which underpins the model of insurance that Vitality champions and justifies its activist approach to social change.

Keywords:

• insurance
• insurtech
• behavioural data
• risk management
• shared value
• digital platform

We believe we are creating a new category of insurance—

our focus is now to make it ubiquitous.

Adrian Gore, Founder/CEO of Discovery Limited

(quoted in Porter et al., 2021, p. 1)

Introduction

Insurance is a strange product. It is not produced or consumed like other commodities. For policyholders, the best-case scenario is that they pay for a service they never have to think about, let alone actually use. As one reinsurer we spoke with said, ‘If you’re shopping for insurance, it likely means you had a bad experience. Your premium price was increased or you had a claim denied’. This is why insurers have also long taken advantage of the ‘loyalty penalty’, or offering discounts to attract new customers, while increasing prices for people who are already customers. That's the cost of staying in one place, rather than going on the market to shop around for new insurers every year at renewal time. For the most part, any interactions with insurers are seen as pain points. It is the classic case of a grudge purchase that seems designed to be confusing. That is how the system has largely been made to operate. Out of sight, out of mind.

And when insurers think about you it tends to be in abstract and aggregated terms. Their scope is populations and pricing tables, not individual persons and their concerns (Krippner & Hirschman, 2022). For insurers, the best-case scenario is that they keep getting paid by customers they also never have to think about for a service they never have to deliver. The nature of this relationship is why insurers have traditionally been adamant that the product they are selling is not the right to future claims. This runs contrary to the complaints of policyholders who feel entitled to reclaim money they spent on premiums. Instead, insurers state they are selling the ‘sense of security’ and ‘peace of mind’ that comes from knowing you have an insurance policy (Baker, 1994). More materially, insurers are also selling access to other things in society that require having insurance. You cannot drive a car or get a mortgage, for example, if you don’t have insurance.

The insurance industry now largely treats customer interactions as problems to solve by minimizing them out of existence through digitalization and automation. Now you can apply for coverage, change your plan, and file a claim without ever talking to a person. It’s meant to be more convenient and quicker for customers, while also being cheaper and easier for insurers to administer large volumes of policies. However, in addition to eliminating the administrative costs of having customers, there is also a growing countertendency toward increasing the frequency and intensity of insurers’ contact with consumers, while also incentivizing consumers to be highly engaged partners with their insurers.

This strategy, called behavioural insurance, is focused on capturing risk data about consumer behaviour – or the activities, choices and lifestyles of policyholders – and treating it as a key source of value that insurers can unlock. Broadly, these methods for behavioural insurance include accurately assessing and analyzing how consumers behave, directly factoring data about consumer behaviour into areas like developing products, marketing campaigns, pricing premiums and handling claims, while also hopefully achieving the holy grail of insurance: actively changing how consumers behave so they are less risky and more profitable.

The growth of behavioural insurance is an important shift in an industry that has been described as ‘among the most pervasive and powerful institutions in society’ (Ericson et al., 2003, p. 3). Thanks to the promise of digital technologies for data capture and machine learning, insurers are looking to behavioural analysis as the future of insurance. While there is plenty of speculative hype and critique about these developments and their consequences, there is also a dearth of empirical research focused on (1) how these broad methods are actually put into practice, and (2) how insurers seek to create and capture value from behavioural data in the context of risk management. This paper advances these research areas.

We build on existing work in the social studies of insurtech, which offers a skeptical view on the actual efficacy of these behavioural interventions and reframes their utility more in terms of corporate branding. Our contribution extends that body of work through original analysis that takes seriously the moral economic theories and practices of behavioural risk, ‘shared value’, and personal data that underpin the dominant behavioural insurance platforms. Beyond treating these corporate claims about behavioural change as pure marketing, we focus on the moral economic system at the heart of these claims, treating it as an object in need of analytical excavation and critical investigation. To do this, we provide an interpretative analysis of materials from a leading corporation in this sector, alongside interviews with insurance professionals working in this area. The moral economy we detail is central to how its proponents justify – in terms of efficacy, profitability and normativity – the behavioural interventions that are central to this growing model of insurance.

Our empirical analysis centres an in-depth case study of the financial services group Discovery Limited (Discovery) and its Vitality ecosystem of data-driven, behaviour-based, interactive wellbeing programmes for life/health insurance. Vitality is part of the Discovery Group of companies and is owned by Discovery Limited. We chose Vitality as the case study because it operates in 40 countries, has 30 million members through strategic partnerships with many of the largest insurers in the world,¹ and is positioned as a world leader in developing the theories, technologies, programmes, and other practices for how the insurance industry engage in consumer behavioural risk management. Vitality describes itself as ‘the longest-running and largest incentive-based engagement platform in the world’,² or more succinctly ‘the world’s largest behavioral platform’,³ or quite simply ‘a global behavioral change platform’ (Adamson & Leresche, 2019, n.p.).

Vitality’s programmes for both life and health insurance policies are designed around offering consumers reward incentives (e.g. points for free Apple Watches and Starbucks coffee) based on information feedback (e.g. sharing data on exercise, eating, etc.) for the purpose of inducing behaviour change (e.g. lower risk lifestyles) and increasing engagement between policyholders and insurers (e.g. regular, direct, data-driven interactions). This approach has made Discovery, via Vitality, a powerful player in the global insurance industry – one that is driven by the belief that it has a ‘social responsibility’ to ‘meaningfully impact’ the behaviours of 100 million people in the near future through the expansion of its platform.⁴

This paper proceeds as follows: The next section outlines the methods and materials that are the basis of this paper. The third section provides a critical overview of behavioural insurance. The fourth section outlines the development of Discovery and its Vitality ecosystem. The fifth section dives deeper into the case study by analyzing the behavioural theory of risk, and the moral economy of ‘shared value’, which underpins the model of insurance that Vitality champions and justifies its activist approach to social change. The final section then concludes by briefly contextualizing the case study's analysis within industry logics where insurers like Vitality become guardians of our lives.

Methods and materials

Our analysis mobilizes a variety of publicly available and primary sources and draws on a range of qualitative methods including close textual analysis, ethnographic interviews and case study approaches. We apply an interdisciplinary lens by drawing on extensive literature critiquing insurance and insurtech from across law, sociology, history and political economy, combined with professional work from actuarial science and risk management. This work provides the necessary background and context for understanding the operations of the insurance industry, alongside the ways the industry’s perpetual development and logics persist as new opportunities and challenges arise.

Our aim is to map the complex ways Discovery theorizes the relationality between behaviour, risk and value. We pay particular attention to how Discovery’s approach engenders a moral economy that is implemented through its Vitality platform, which it leverages to spread an ideology of ‘shared value’ throughout the global insurance industry. To achieve this aim, our in-depth analysis engages with industry material from insurance companies, actuarial consultancies, professional organizations, government regulators and trade media. Supplementing this is material relevant to the broader insurance/insurtech market, and a deep and critical review of dozens of documents and hundreds of pages of information produced by (and about) Discovery and Vitality. We analyze investor relations documents like annual reports, marketing materials dating back 20 years, pamphlets on the Vitality programme, articles on its ideology of Shared Value (Insurance), technical reports on how the digital platform works, scientific research about its efficacy for behavioural change, peer-reviewed studies by researchers employed or funded by Discovery based on data from Vitality members, and legal policies related to data privacy, governance, sharing, usage and ownership.

Our primary research also engaged with key industry informants through 10 formal interviews and more than 100 informal conversations with people working in different parts of the insurance/insurtech sector. We conducted these discussions during ethnographic fieldwork in the United States and Australia in 2022–2023 at major international industry conferences, including Insuretech Connect Vegas and the International Congress of Actuaries, plus smaller insurtech networking and educational events for people within the industry. Due to the nature of these interactions, it was rare that we sat down to conduct standard 60-minute audio-recorded interviews with participants. More commonly, these interviews took place five to 20 min at a time, often while standing at an expo booth or networking mixer, with the conversation being summarized in field notes afterwards. In many cases, we spoke with the same people multiple times during a multi-day conference and/or at different events during two years of research, thus allowing us to develop closer relationships and get an insider view of the industry and their perspective. Our participants include people who directly worked on behavioural insurance generally, and with Discovery/Vitality specifically, in positions such as pricing actuaries, data scientists, product developers, risk managers and salespeople. Besides general descriptors, participants have been anonymized in accordance with research ethics procedures.

The ethnographic interviews informed and validated our analysis of industry materials and practices. This work is also the basis of our critical overview of behavioural insurtech in the next section, where we highlight the broad skepticism about the efficacy and purpose of these initiatives. Skepticism that not only arises from critical social scientists, but also, as we show, from actuaries with technical knowledge of this area.

The reality of behavioural insurance

Before we present our main case study centred on life/health insurance programmes, we provide an overview of behavioural insurtech. Considering the scale and influence of this industry, there is relatively little critical, empirical social analysis of insurance and even less about its behavioural variants (Tanninen, 2020). Since much of the scholarly literature, as well as the industry’s attention, has tended to focus on vehicle telematics, we must take a quick detour through this existing work and the domain of automotive insurance. This work helps situate our case study in a broader context of the insurtech sector.

In brief, telematics refers to ‘black box’ devices plugged into data ports in cars, sensors built into vehicles by manufacturers, and/or smartphone apps using mobile sensors, all of which generate data about a vehicle’s operations, including behavioural data about when (e.g. times of day, for how long), where (e.g. precise geospatial location), and how (e.g. hard braking, sharp turns) a car is driven and then transmit that data to manufacturers, insurers and other third-parties. Insurers are steadily introducing policies like ‘pay-as-you-drive’, which are built on vehicle telematics devices and smartphone apps that track data about when, where and how individuals drive. Think of it like a Fitbit for your car. That data might then be used to personalize premium prices, create driving scores for policyholders, penalize or reward drivers for their performance, and adjust claims for crashes.

Car insurers have experimented with telematics for decades, but the policies have never really become widespread; there is much more failure than success in the market (Francois & Voldoire, 2022; Meyers & Van Hoyweghen, 2020). While the technological solutions have advanced, their social adoption has remained stubbornly. Although, as we were told by data scientists and product managers working at major telematics companies, this trend is starting to reverse thanks largely to the COVID pandemic and the rising costs of premiums. People were driving less during the pandemic, and thus didn’t want to pay for an always-active insurance policy, so they went searching for ways to lower their skyrocketing insurance bills, even if that meant sharing detailed driving data with insurers just for the possibility of discounts.

Consumer adoption is not the only impediment to success for telematics. Theoretically, the vast amounts of rich data from telematics are supposed to be a great enabler for dynamic pricing. In practice, actuaries have had trouble incorporating these radically different types of datasets (real-time, high-volume, granular, heterogeneous) into traditional pricing models that are ingrained in the profession and industry, leading to uneven and inconsistent adoption by insurers (Barry & Charpentier, 2020). ‘There is therefore a tension between imaginaries of personalization, and the calculative devices currently used to assess risks’ (Barry & Charpentier, 2020, p. 9). This does not mean telematics have had zero effect on insurance. Rather, it means the impacts are not grand, sudden, obvious disruptions that radically change the whole industry. They instead tend to be operational advancements for existing practices, which align with logics, interests and ambitions are already established in the industry (Sadowski, 2023). Generally, this means the effects of insurtech can be even more systemic and less observable from the outside.

There are also important differences in how very similar products are used in different markets. For example, as Meyers and Van Hoyweghen (2018) show in their own case study, the Dutch telematics car insurance product Fairzekering is marketed as a fairer version of insurance for good drivers which is designed to attract good risks for the company. Thanks to algorithmic personalization, Fairzekering policyholders are only charged according to their own driving behaviour, rather than being negatively impacted by the bad driving of others in the risk pool. The idea behind actuarial fairness is that you should only be responsible for your own risk, behaviourally and financially.

However, these same concepts and products can be rolled out in ways that are aimed at totally different market segments. Consider the company HiRoad (a wholly owned subsidiary of State Farm) in the United States, which requires policyholders to use a software app that measures their driving via smartphone sensors. The app then provides feedback through four scores that measure driving behaviour, as well as personalized recommendations for better driving, which all reflect the company’s moralistic marketing around becoming a ‘mindful’ and ‘conscientious’ driver. We interviewed a software engineer at HiRoad who explained that the programme is geared toward high risk, subprime drivers who cannot access (affordable) policies with fewer conditions (like using tracking and scoring technology) from traditional carriers due to their demographics and/or driving history.

In other words, both Fairzekering and HiRoad are different ways to segment and segregate the market for insurance. While the theory is that their behavioural monitoring will make people better drivers, whether through rewards or penalties, and thus into better risks for insurers, the actual efficacy of these interventions for risk mitigation is still an open question among actuaries and data scientists.

Programmes built around fitness wearables for life/health and telematics for vehicles are considered mostly ‘gimmicks’, as we were told by a senior actuary who has worked on risk pricing for behavioural insurtech products. The actuary was not completely dismissing these products as having no purpose in the industry, but rather saying they are primarily branding tactics (see also Jeanningros & McFall, 2020).⁵ They offer a way to carve out a niche and establish product differentiation in tight, homogeneous markets for insurance. Additionally, they can offer value through consumer segmentation and risk selection. That is, dividing up the market and identifying which types of customers you do and don’t want to engage with. This might be through ‘cream skimming’ by attracting lower risk customers or ‘signposting’ by sending higher risk customers down the market.

In general, the use of behavioural insurtech for purposes like hyper-personalization and actuarial discrimination is still more aspirational than actual; although insurers have long been pushing toward these goals and searching for innovations that can bridge the divide (Sadowski, 2023). Ultimately, insurers aim to gain an informational advantage over the public, which allows them to enact more refined systems for inclusion and exclusion, personalization and discrimination across the whole ‘insurance value chain’, including how they handle applications, underwrite policies, manage claims and detect fraud.

By calling them ‘gimmicks’, the actuary was referring to their questionable utility and integrity as tools for risk mitigation and behavioural modification – which is how they tend to be sold by companies deploying these strategies and technologies. We heard the same skeptical conclusions from many others in the industry who work with behavioural insurance products, including pricing actuaries, data scientists and risk managers at reinsurers. For the industry, two major related problems are the (un)reliability of data from wearables like FitBits and the (in)consistency of use by policyholders (Tanninen et al., 2021). In other words, ‘getting people to use the damn thing, so that it becomes part of their lifestyle’, as the Executive Vice President and Chief Medical Officer of UnitedHealth said at a Digital Health Summit (Schüll, 2016, p. 323). Discovery/Vitality are at the forefront of trying to solve these problems, as we’ll discuss further below, by using theories from behavioural economics to devise incentive schemes and interactive platforms.

Another actuary at a major insurance company told us that these programmes were dubious from an actuarial perspective because there was really nothing to stop people from falsifying their data to maintain their status (and rewards) in programmes like Vitality. Insurers know that somebody could just strap a FitBit to a dog and let them run loose to ensure the person reaches their 10,000 steps per day requirement for Platinum status. In that regard, it’s fitting that the 10,000 steps metric, despite being so widely associated with healthy lifestyles, also has ‘limited scientific basis’ and was actually created as a marketing campaign for a Japanese pedometer during the 1964 Tokyo Olympics (Lee et al., 2019). Insurers might instead require other sources of data like recording visits to partner gyms and monitoring heart rate during exercise, but those proxies for health are also inaccurate, imperfect and fudged in their own ways. The general skepticism about (if not broad failure of) products and programmes like Vitality capturing data useful for pricing premiums or handling claims – let alone actually induce behavioural change in meaningful, measurable ways – is privately acknowledged in the industry, but not publicly discussed.

The reality of insurtech exist somewhere between the opposite sides of either largely buying into claims that insurers can control our behaviours, as if they had data-driven mind control rays, or simply dismissing the technology as pure hype and vaporware with no material basis. Our case study of Vitality shows that there is a more interesting, and just as important story, to unravel about how this insurtech platform is valuing risk and risking value in everyday life (Christophers, 2018). Our paper directly builds on the excellent work of Jeanningros and McFall (2020), who offer one of the only other critical case studies of Discovery/Vitality. Drawing from cultural economy and data studies, they argue that, at least in the realm of life/health insurance, behaviour is more a way of branding insurance products, rather than a basis for underwriting policies. ‘This doesn’t necessarily mean that individual health risk assessment is irrelevant – it means that the commercial value of behavioural schemes need not be based on using the data for fine-grained risk assessment’ (Jeanningros & McFall, 2020, p. 12). The behavioural branding of Vitality – and its association with other valuable brands like Apple, Starbucks and Virgin – is a way to differentiate Vitality in the highly competitive and regulated markets for insurance.

All of this raises an interesting paradox where Discovery knows that the branding of Vitality is central to its value, but it must deny that the branding is the basis of Vitality’s value, because that would undermine the core value proposition of the platform as a powerful system for positively changing people’s behaviours. If the platform is actually mostly about positive risk selection – attracting customers who already have healthy lifestyles – then what’s the point of the complicated system of data, devices, points, nudges, incentives, partners, scientific studies, capitalist ideology, and so on? Perhaps that system is an elaborate way to keep an unstable but valuable façade of corporate branding – which is built on a crumbling foundation of behavioural economics (Lewis-Kraus, 2023) – from totally collapsing.

Importantly, and unsurprisingly, the people we’ve spoken with from Discovery/Vitality disagree with any characterization of their products as primarily branding and marketing gimmicks, or as new clothes for old metrics. They recognize that the reliability and consistency of data collection, and the trust and confidence of consumers, are ongoing issues that need continual improvement. At the same time, and where others have failed, Discovery insists it has cracked the code for effectively using data to reduce risk, change behaviours, and truly create shared value for insurers, consumers and society. Beyond merely making these claims in their marketing pamphlets, Discovery has constructed and championed a moral economic system of behaviour, data, risk and value that underpins Vitality. For the company, there is no paradox to resolve. The goal and its methods are clear, consistent, and proven by their ‘science-based’ system. Taking this system seriously as an object of critical investigation, we offer an intensive analysis of the theoretical foundations of this growing model for behavioural insurance.

Discovery, vitality and making an ecosystem

Discovery, with its Vitality platform, was built as a behavioural insurance programme from the beginning, which quickly embraced digital systems, and has continued investing, expanding and reinforcing its data-driven approach. This has allowed Discovery to successfully broker partnerships with major insurers around the world where Discovery is the provider of the marketing, platform and philosophy needed to deliver and manage the Vitality programme, thus allowing large incumbents to bypass the capital expenditure of having to develop and maintain such a programme on its own. The relationships that Discovery brokers with insurers are much deeper than the X-as-a-service models that are common in software, but they are similar in terms of the flexibility, speed and scale they afford major insurers that otherwise move very slowly when rolling out new products and systems.

Before getting deeper into the theoretical foundations of the Vitality platform and ideology in the next section, we trace a brief history of the corporation to provide useful context for how Discovery/Vitality and its model of behavioural insurance has developed and expanded over decades, often in response to changing market and regulatory conditions.

Discovery was founded in 1992 by Adrian Gore and Barry Swartzberg, both actuaries at Liberty Life in South Africa. By 1997, they had developed the first version of the Vitality programme. From the start, they had already established many of Vitality’s key features, including the use of incentives – financial, motivational and personal – based on behavioural economics to induce policyholders into healthier lifestyle activities like exercising more, eating better and smoking cessation.

In a competitive market for health plans, ‘Gore was seeking ways to differentiate Discovery, when a national fitness chain contacted him. The chain wanted to market its gym membership to Discovery’s customers’, according to a detailed but hagiographic case study of Discovery from Harvard Business School (Porter et al., 2021, p. 3). (We discuss the case study’s lead authors, Michael Porter and Mark Kramer, later in this paper.) Gore saw an opportunity to pivot toward wellness as the hook for Discovery. While many other wellness programmes had failed, Gore thought Vitality’s focus on ‘behavioral economics and rigorous data analytics’ would be a key success driver (Porter et al., 2021, p. 3). Despite any current claims about its purpose and effects, it is apparent that the origins of Vitality were branding and product differentiation. Ideas about the relation between data, risk and value were also present, but always tied to marketing.

These ideas were further developed a few years later when new insurance regulations in South Africa mandated open enrolment and community rating. This egalitarian regime sharply limited the ways insurers could discriminate against people through denying policies or charging different premiums. Therefore, finding other ways to stand out in the market, actively manage the risks/claims of policyholders, and attract populations who were lower risk (and higher profit) became an even more necessary source of innovation in response to regulation that limited traditional methods for preferred underwriting. Vitality thus became fully organized around an incentive programme where policyholders earn points, achieve statuses, receive rewards, and stay actively engaged with their insurers.

The year 2000 also marked Discovery’s first expansion into foreign markets as it tried to bring its insurance plans and Vitality programme to the United States through partnerships with established health and life insurers. In 2004, it entered the United Kingdom through a joint venture with Prudential to launch PruHealth and PruProtect. Ten years later it acquired full ownership of the venture and rebranded the products VitalityHealth and VitalityLife. Its UK business is unique because it remains the only other place outside of South Africa where Discovery via Vitality is a primary provider of insurance, rather than a partner with an already established insurer.

By 2008, Discovery abandoned its attempt at breaching the US insurance market as a primary insurance provider after losing around $100 million while trying and failing to compete with existing health care providers that already dominated the market (Porter et al., 2021). Instead, Discovery shifted focus by creating the Vitality Group, a separate provider of corporate wellness programmes, which would not be a primary insurance provider like Discovery. Vitality Group entered into a joint venture with Humana, a large US health insurer, forming HumanaVitality. This venture was a licensing deal: Vitality would license its programme’s intellectual property for insurers to integrate into their benefits plans and receive a management fee. Vitality then expanded this licensing approach with other US companies.

This time period also coincided with the passing of the US Affordable Care Act in 2010 – a.k.a Obamacare – which had major provisions supporting wellness programmes like Vitality that are based on individualistic, behavioural, and lifestyle approaches to improving health outcomes (Hull & Pasquale, 2018). Corporate leaders had already been lobbying for these provisions for more than a decade because they saw such programmes as effective mechanisms to shift costs from employers to employees – and from healthy, able workers to sick, disabled workers – all in the name of improving lives, increasing productivity and making society better (Nopper & Zelickson, 2023; Wiley, 2014). As Gordon Hull and Frank Pasquale (2018, p. 193) explain in their critical socio-legal analysis of corporate wellness programmes:

Nothing in the [Affordable Care Act] prevents insurers from making up the ‘discounts’ or ‘rebates’ they give to wellness participants by raising the price of plans overall. Given the high price of individual and family coverage, a 30 per cent ‘discount’ for some can easily translate into thousands of dollars more in expense for others in the plan. The law effectively enables harsh price discrimination based on whether the insured participates in the wellness program.

This provided fertile conditions for Vitality to thrive and its programme with Humana grew quickly. However, despite that success, the joint venture with Humana fell apart in 2016 due to business conflicts over how the Vitality programme was managed and marketed. Humana took over the programme completely and renamed it to Go365. In turn, Discovery reacted to this experience by adopting ‘a much more protective attitude to its intellectual property. It no longer sells the program to partners: instead, it co-designs local iterations with them’ (Jeanningros & McFall, 2020, p. 10). This far more proactive approach also marked a time of rapid international expansion for Discovery/Vitality. Through partnerships with a long list of major life/health insurers that have integrated Vitality into their business – along with the theory, technology and ideology that has become fundamental to the Vitality programme over time – Discovery has gained access to over 40 markets that cover every region of the world.

As it continues to grow, the list of branded products and partnerships in the Vitality ecosystem has become long, confusing and difficult to track. When taken as a whole, the Vitality ecosystem can seem overgrown and tangled. At the same time, the theory of behavioural change, mission of shared value, and frameworks for risk mitigation remain remarkably consistent across its global network.

Vitality’s theory: Behaviour, data, risk and value

‘Apart from government, insurance is the only entity that can tangibly monetize improved health outcomes’, writes Adrian Gore in the forward to a recent report from Discovery (2022, p. 5) titled The science of vitality. ‘However, most insurance models fail to account for the change in insurance risk, from pre-existing conditions to human behaviour’. This report is a useful encapsulation of the theories and research from behavioural science that underpins Vitality and the model of behavioural insurance they champion. Whereas other insurers are busy trying to capture value from their static, passive and reactive approaches to risk management, Vitality claims to be creating value through its dynamic, active and preventive method of risk mitigation.

In this section, we dig deeper into the core theory (behavioural change) and ideology (shared value) – both of which are enabled by digital technologies – that underpin the moral economy of Discovery/Vitality and its global platform ecosystem. Rather than being based on purely descriptive work that repeats what is readily apparent on the surface of Vitality’s marketing, we construct this work through an interpretative analysis that brings together a wide range of materials, which are drawn from Vitality and its ecosystem. Rather than imposing our own conceptual framework on Vitality’s practice – such as by providing a Foucauldian reading of wearable insurtech – our interest is in critically drawing out the industry’s own theory of the moral economic relations that manifest between behaviour, data, risk and value.

At its core, Vitality is premised on the following propositions: (1) The most important risks for insurers are behavioural in nature; (2) Specific controllable behaviours are direct, major causes of outcomes like death and debt; (3) Those lifestyles (i.e. behavioural habits over time) can be changed in specific, significant ways by applying techniques from behavioural economics; and (4) These changes will lead to meaningful benefits for individuals (wellbeing), insurers (profits), and society (productivity). We expand on each proposition below.

Proposition 1: Risks are behavioural

‘The nature of risk is behavioral’ (Discovery, 2022, p. 44). This strong statement is the theoretical foundation on which the edifice of modern insurance is being built. This claim is also an assertion about the relation between individual behaviours and social structures and the primacy of the former over the latter when it comes to the actuarial governance of risk. Earlier forms of insurance were built around social solidarity and mutual aid; risk pools were ways to formalize the material connections and moral obligations of communities who faced uncertainty together (Lehtonen & Liukko, 2011). But that ‘collective and cooperative view’ of insurance as a social institution is in direct competition with – and has long been directly and successfully opposed by (Walters, 1981) — the ‘individualistic and profit-oriented’ view of insurance as a financial industry (Frezal & Barry, 2020, p. 128).

The behavioural theory of risk pushes this logic further by shifting the focus away from social conditions and toward personal choice. Katie Tryon, director of health strategy for Vitality UK, recently said, ‘Nearly 50% of the health burden in the UK is preventable and actually nearly 90% of that is to do with lifestyle choices alone, such as increasing physical activity and improving nutrition’ (Cover, 2022). Her remarks were made in an interview with a trade magazine – where Tryon was speaking to the insurance industry – in the context of making the case that insurers now have a larger, proactive role in identifying and preventing risky lifestyles. This is a message the industry is already primed and ready to receive.

The longstanding aspiration of this approach is demutualization by personalization. By finding, assessing and pricing risk at the individual level, then insurers hope they can finally drain the risk pools and capture the full value of risk governance (Sadowski, 2023). Digital technologies like self-tracking, big data and artificial intelligence now promise (and threaten) to make this dream a reality, however, as discussed above they have so far failed to achieve that aspiration in a material way (Barry & Charpentier, 2020; McFall, 2019). Therefore, if insurers cannot yet fully personalize the price of risk, then the next best thing is to responsibilize the sources and consequences of risk at the level of individuals and their choices.

Proposition 2: Behaviours are causes

Theories are ways to explain phenomena. For Vitality, its theory provides the causal links between behaviours, risks and outcomes, which then justifies the model and platform it prescribes. Discovery regularly makes these causal claims when outlining the problems, purposes and programmes that motivate the whole Vitality ecosystem. They are neatly captured in an infographic about the Science of Vitality (see footnote for link).⁶ Here we can see that in each of the three main areas where it has developed products – Vitality Health, Vitality Drive, and Vitality Money–Discovery has identified discrete choices and specific habits that they claim are the significant causes of major problems in people’s health, driving and banking. For example, ‘chronic conditions’ like cancer and diabetes can be chalked up to four ‘lifestyle behaviours’ of physical inactivity, poor nutrition, smoking, and alcohol abuse. The direct links between behavioural causes and their fatal consequences are much too neat, especially since actuarial science does not work in the realm of causality but rather correlation and probability. Though, in practice, actuarial decisions are also heavily constituted and justified by subjective stories about risk data (Glenn, 2000), so in this regard Vitality’s theory is consistent with the broader industry and profession.

However, the most striking thing about these theoretical claims is how strongly Discovery reasserts the primacy of behavioural risk in the Science of Vitality report. For example, ‘Driver behaviour, how a person drives their car, is the main cause of accidents and motor vehicle fatalities, irrespective of the safety of their car and the effect of the environment’ (Discovery, 2022, p. 44). Such a statement is totally consistent with how Vitality also understands other domains like health and money. Beyond simply stating that behaviours are key factors to consider or tackle, this theory of risk pushes the conclusion that only personal choices matter, not external conditions.

To be sure, these claims are intentionally forceful as a way for Vitality to highlight the difference between its value proposition (and market position) compared to other risk models. Discovery states this explicitly here: ‘Traditional banks segment and price clients on their socio-economic status, however, the nature of risk in banking is as much behavioural as it is socio-economic’ (Discovery, 2022, p. 50). Yet, Discovery is not just building this theory and making these claims from a position of sectoral irrelevance. These claims are all very striking, but they are not pure bluster, nor are they very surprising coming from Vitality. We can challenge the truth of this theory, but we should not deny the power this ecosystem has in the global insurance market. The entire model of behavioural insurance is built on this theory being translated into marketable programmes and actionable interventions.

Proposition 3: Causes can be changed

Behavioural insurance continues to grow rapidly across the industry and Discovery has done far more than most to develop and support the underlying theory of risk for these approaches. While many insurers are concerned with identifying behaviours as key sources of risks, which can then be better analyzed, assessed and accounted for in actuarial models, Discovery never stopped there. The most important (and most contentious) use of the theory has always been actively changing those behavioural risks in specific, significant and long-lasting ways. Adrian Gore, founder of Discovery, said he was motivated from the beginning to find ways to drive down costs for insurers by incentivizing policyholders to reduce their ‘consumption of health care services’, thus making fewer and smaller claims (Porter et al., 2021, p. 3).

Over time, this has turned into a system of carrots and sticks, which is supported by the work of behavioural economists like Richard Thaler and decision psychologists like Daniel Kahneman, enabled by digital devices and brand partnerships, all designed to increase profits by getting people to lead lower risk, healthier lifestyles. ‘It really takes a complex combination of nudges and incentives to truly bring about sustained behaviour change’, said Vitality UK’s director of health strategy (Cover, 2022, n.p.).

The programme has variations depending on the partner, regulations and other features of each market where it operates. At its core, Vitality is about combining the accountability of goal setting and the motivation of regular nudging by a ‘digital coach’ with a system of ‘gain-framed’ and ‘loss-framed’ incentives.

In terms of gains, this means receiving Vitality points for tracking factors like exercise, nutrition and sleep, as well as completing regular medical examinations. Members are then rewarded with things like grocery vouchers, gift cards and movie tickets. In jurisdictions where insurers have more control over how they set prices, like in the United States or United Kingdom, earning Vitality points and meeting certain goals can also lower premiums through direct discounts. Diamond or gold members pay less than silver or bronze members.

In terms of losses, the main incentive programme for Vitality is based on members receiving an Apple Watch with heavily subsidized upfront costs, but with monthly repayments linked to their Vitality points and status. Achieving high points means having low or zero monthly repayments, but if your points decrease then your repayments will increase up to full price for the device. Additionally, the points and status members achieve are reset every year to encourage continual and increased engagement with the Vitality programme.

Discovery has produced, commissioned and supported a large literature of studies, reports, academic articles and other materials meant to prove its theory of behavioural insurance and support the efficacy of their behavioural interventions. Most of these studies are based on analysis of massive datasets collected by Discovery from Vitality members about their daily activities, so the conflicts of interest are obvious. As a side note: the amount of behavioural data that Discovery says it captures is mind-boggling. We focus more on the politics and governance of Vitality’s data in other work underway. However, it is worth noting here that the company claims to have ‘built up a significant and sophisticated data asset – over 50 million life years of behavioural-linked insurance data – which has given us deep insights into the links between behaviour change, development of disease and the overall state of health’ (Vitality, 2021a, p. 4, 2021b).

In practice, these studies act like totems of authority. They are not really meant to be read by the public, but merely referenced by the company as assertions of fact. Despite that, we have read them closely, including the one Discovery touts most loudly in its materials about Vitality: a hefty technical study commissioned from RAND Europe that assesses the Vitality Active Rewards with Apple Watch and its efficacy as an incentive programme to make people more physically active (Hafner et al., 2018). The study was based on statistical analysis of data from 422,643 Vitality members collected between 2015 and 2018. It found that a person who engages in the Apple Watch programme ‘tracks on average 4.8 days per month (or about 34 per cent) more activity than the individual who participates in Active Rewards only’ (Hafner et al., 2018, p. 25). The study hand waves the obvious critique that this may not be behavioural change, but just a change in how well people record and report data about physical activity. References to the study’s conclusions in other materials drop any of these qualifying details that might cast doubt on the direct, causal effect of its incentive programme. Even with the deck stacked totally in their favour, the evidence of effect is much weaker than Discovery/Vitality are willing to let on.

The actual efficacy of programmes like Vitality is still very much an open question even among professionals working on these products, as we discussed earlier. While Discovery says the data speaks for itself – though it is also happy to speak for the data – the largest hurdle Discovery has to clear is getting the public to trust that the company actually has their best interest at heart. Discovery would not deny that Vitality is meant to be a money-making programme for the company and partner insurers, but Discovery would rebuke the idea that Vitality has ever been a cynical endeavour. For them, everybody is uplifted by this mission. After all, the key selling point of Vitality is that it is a data-driven, science-backed programme for improving personal wellbeing and public health, which then leads to a stronger economy and better society. While this wouldn’t be the first time that peer-review was used as a branding tool, Discovery has gone much further than just creating a marketing campaign for the benefits of its programmes. The efficacy of Vitality as a powerful force for good in people’s lives is a core pillar of the moral economic ideology that supports Discovery in everything it does.

Proposition 4: Change is good for everybody

‘The capitalist system is under siege’. This forceful statement is how Michael Porter and Mark Kramer (2011), in a featured article for the Harvard Business Review, describe the current crisis of trust and legitimacy that corporations are now confronting in a society skeptical of how they wield power and wealth. ‘Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face’ (Porter & Kramer, 2011, p. 4). However, capitalism has gone astray and companies have lost their way, as both the system and its agents have become corrupted by ideas that frame economic value (profits) as antagonistic to social value (progress).

In their manifesto for ‘Creating shared value’, Porter and Kramer – both professors at Harvard Business School who are influential ‘thought leaders’ in the areas of business strategy and corporate governance – outline what they call ‘the next evolution in capitalism’. Their model of Shared Value reframes progress as a source of profits. Thus, by improving people’s lives and addressing social problems, ‘business can earn the respect of society again’, while also drastically improving their own bottom lines (Porter & Kramer, 2011, p. 17). It is the apotheosis of an all winners, no losers strategy for unleashing the ‘next wave of innovation and productivity growth in the global economy’ (Porter & Kramer, 2011, p. 4).

This model overlaps with other ideas for a nicer, kinder capitalism like ESG, DEI, or CSR,⁷ but as Kramer explains, CSV (Creating Shared Value) is distinguished by its ‘emphasis on an economic return to the company at the same time that the company is working to achieve a positive social impact’ (FSGImpact, 2011, n.p.). Making money never takes a back seat. In fact, making money is the most powerful motivator for doing good in the world. In many ways, Shared Value seems like a microwaved version of Milton Friedman’s (1970, n.p.) doctrine that the ‘social responsibility of business is to increase its profits’. Porter and Kramer preempted that comparison by saying that Friedman was right, but his doctrine also had a narrow view of the corporation as a self-contained entity, rather than an active force for change within society.

Their new (but old) philosophy for ‘how to reinvent capitalism’ has become the basis for a sprawling ‘ecosystem’ of consulting, case studies, corporate initiatives, innovation strategies, marketing campaigns, executive roundtables, public-private partnerships, and other such initiatives (Kramer & Pfitzer, 2016). This ecosystem has grown massively over the last decade as companies eager to align with social causes and become change agents – all while increasing their market share and bottom line – embrace the strategic makeover of being a shared value corporation.

While other companies treat Shared Value as just one of their many tools for branding and publicity, the focus of our paper, Discovery, has moulded itself into a paragon of Shared Value. Discovery has adopted this ideology with all the zeal of a convert, fully integrating the mission, beliefs, and models into every aspect of its corporate identity and activities. As Discovery states, this ‘has resulted in a new category of insurance: Vitality Shared-Value Insurance’.⁸ Through the partnerships that Vitality has with insurers around the world, Discovery has also become a missionary for this ideology, converting other major corporations in the industry into adherents and advocates of Shared-Value Insurance. For example, a video that Discovery produced – about their commitment to change the world by changing how people behave – opens with Michael Porter saying, ‘Vitality is really a remarkable idea that is actually the personification of shared value’ (DiscoverySA, 2019). The video then transitions into interviews with a series of chief executives from large insurers who are partnered with Vitality, including AIA (Asia Pacific), Manulife (Canada), John Hancock (United States), Generali Group (Europe), Sumitomo Life (Japan), Ping An (China), as well as a programme manager from the World Health Organization – all of whom pledge their support for Vitality Shared-Value Insurance.

Discovery calls their model a ‘virtuous cycle’ where ‘material benefits’ are generated and shared in an infinite loop among three groups: members, insurers and society.⁹ The simple but powerful logic starts with the value created for individual members of Vitality, who gain benefits like improved health, prices, and rewards through their deep, constant engagement with the behavioural incentive programmes. That value is then shared and transformed as it flows to insurers via Vitality in the form of lower claims due to positive selection (choosing lower risk people) and risk prevention (making people healthier, safer), along with lower lapses in policy renewal through increased customer engagement, which all result in what ultimately matters for corporate insurers: higher profit margins. Scaling up from there, the value is shared even more widely as it helps create a better society with improved productivity (because people work harder, longer, with fewer absences) and reduced healthcare burden (because people take responsibility for their own health). The cycle then starts again as insurers reinvest their profits back into behavioural incentives, thus more effectively and expansively changing people's lifestyles, thus creating even more value that is shared by everybody.

The explicit promise of the Shared Value (Insurance) model is that corporations do not have to sacrifice their own desire for profit to earn the trust and respect that comes with creating a better world. Far from being driven by pure self-interest, they are motivated by sharing value. Sure that value might be framed according to the preferences of corporations – like instrumentalizing the management of human capital for improved productivity and reduced spending – and sure they might get a bigger share of that value, but it is still sharing nonetheless.

Based on this ideological model, society is just a collection of individuals, corporations and risk pools. So, who better to be the stewards of societal and personal value creation than professional managers of risk? Vitality (2019) has driven this point home in reports like one titled ‘Fit bodies, fit economies’, which summarizes another study commissioned by RAND Europe, but this time about ‘the economic benefits of a more physically active population’ (Hafner et al., 2019). This macroeconomic modelling draws connections between physical activity and public health with workplace productivity and global GDP, thus seeking to show that programmes like Vitality could contribute upwards of US$760 billion to economic growth by 2050. We can pick apart the model, but its specific parameters and numbers are not really the point. The point is to draw conceptual and causal links between areas where Vitality operates and build a stronger case for Shared-Value Insurance as an economic policy framework that extends beyond just products for health tracking or vehicular telematics.

While behavioural economics provides the theoretical foundation for Vitality’s intervention programmes, the moral economy of Shared-Value Insurance provides the ideological justification for an activist approach to social change in the name of risk reduction. Based on this position, it is actually more ethically and socially progressive for the relationship between insurers and customers to become increasingly more intimate, persistent and interventionist. This approach also aligns with, and further fuels, a broader movement in the insurance industry away from a ‘“repair and replace” model to a “predict and prevent” mindset’, said State Farm’s chief operating officer in a press release about the large stake they purchased in home security firm ADT. ‘These innovations will help us take the next step into the future of home insurance and add more value for our customers’ (State Farm, 2022). Phrases like ‘repair and replace’ and ‘predict and prevent’ do not come from State Farm; they are slogans that can be seen repeated widely across the industry – from companies, at conferences, by consultants, and in trade magazines.

The modern insurance industry – stretching back 350 years to its origins in London with professional risk pooling for maritime, fire, and life insurance – has never taken a purely passive or reactive approach to risk. It has always tried, in various ways and degrees, to be proactive in how it prevents risk and mitigates its effects. The new ‘mindset’ is actually more like a renewed hope that technologies will produce greater capabilities for anticipatory control and actuarial governance (Sadowski, 2023). For Vitality, the key to unlocking these powers is ‘science-based behavior change’. Along with supplying a technological ecosystem to enact the ‘predict and prevent mindset’, Vitality has also championed a behavioural theory of risk and moral ideology of value that supports this model as the future of insurance. Its holistic strategy has helped Vitality expand globally – in an industry and market that is notoriously difficult to breach – by enrolling other major insurers into its platform and philosophy. We can, and should, question whether behavioural insurance is even effective, and if its effects are meaningful and desirable. Yet, even as professionals in the industry express these concerns, corporations are charging ahead.

Conclusion

Vitality is in the vanguard of ‘wellness capitalism’, a regime identified in a new report by researchers at the think tank Data & Society (Nopper & Zelickson’ 2023), which traces the broader history and growth of this political economy of ‘health maintenance’ in the United States and its deep ties to corporate profits, worker control and the individual responsibilization of healthcare. The global market for wellness capitalism has been on a steep upward trajectory over the last decade, as the report explains:

The embrace of wellness capitalism and its win-win narrative has given rise to an enormous employee wellness industry. In 2013, half of all organizations with over 50 employees offered a health and wellness benefit of some kind — representing an industry worth $6 billion. Less than 10 years later, in 2022, the employee wellness market has ballooned to approximately $56 billion and is expected to reach $109 billion by 2030. Startups in this industry are raising large sums of money from venture capital. For example, in January of 2022, the mental health platform Lyra Health raised $235 million (the company has raised over $910 million in total). (Nopper & Zelickson, 2023, p. 10)

We have further contextualized this growing regime within a broader critical overview of behavioural insurtech and a deeper empirical case study of Discovery/Vitality. Moreover, we have detailed the moral economy of behaviour, risk, and value which underpins the model of insurance that Vitality champions and justifies its activist approach to social change. These strategies and logics are not unique to the rise of insurtech over the last decade; they are instead part of longstanding features and motivations of the insurance industry (Sadowski, 2023). The grand interventionist ambitions that underpin these complex systems of behavioural modification and valorization are, in many ways, revivals of older forms of insurance that were far more directly paternalistic and moralistic (Horan, 2021). The self-mythologizing of corporations being profitable agents of social progress has also long been at the heart of how the insurance industry frames its role in society. What we see here are differences in how the power of actuarial governance can manifest in our lives. But ultimately, we argue, it is the same logic that once saw insurers as ‘guardians of the future’ (Cummings, 2021, n.p.) and now sees them as ‘an active life partner with their customers’, as AIA Vitality is described in an article by the Shared Value Project (Houghton & Wong, 2020, p. 2).

Through a case study of Vitality, we have analyzed this model of insurtech and its moral economic foundations. We have raised skeptical questions about the effectiveness of behavioural interventions and have supported arguments that behavioural insurance is mostly about corporate branding. However, we have also taken seriously – as objects of critical investigation – the theories, ideologies and missions that drive this rapidly expanding model for insurance. Value for insurers may not be reliably created by changing lifestyles in significant and sustained ways. These insurtech systems may not work in the way that their advocates and critics claim. The whole thing might be an ideological façade for garnering interest from partners and buying time until the behavioural interventions and technologies are more effective in the future. Despite needing to confront these paradoxes of the Vitality platform, these corporations have devised other ways to capture value, manage risk and increase their market share. They are continuing to grow in size and power, advancing the logics and goals described above.

Ethical research statement

This research was approved by the Monash University Human Research Ethics Committee (project ID: 31615).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work is funded by an Australian Research Council DECRA Fellowship [grant number DE220100417].

Notes on contributors

Jathan Sadowski

Jathan Sadowski is a Senior Research Fellow in the Emerging Technologies Research Lab at Monash University, and an Associate Investigator with the ARC Centre of Excellence for Automated Decision-Making and Society. Jathan is the author of two books – Too smart (MIT Press, 2020) and The mechanic and the Luddite (UC Press, 2024) – both about technology and capitalism.

Kelly Lewis

Kelly Lewis is a Research Fellow in the Emerging Technologies Research Lab at Monash University and the ARC Centre of Excellence for Automated Decision-Making and Society. Her research focuses on digital media, platform ecosystems and data cultures.

Zofia Bednarz

Zofia Bednarz is a Lecturer in Commercial and Corporate Law at the University of Sydney Law School, and an Associate Investigator with the ARC Centre of Excellence for Automated Decision-Making and Society. Her research focuses on the law and governance of personal data and artificial intelligence.

Notes

1 Accessed 30 June 2023: https://www.vitalitygroup.com/company/

2 Accessed 30 June 2023: https://www.vitalitygroup.com/why-vitality/

3 Accessed 30 June 2023: https://www.vitalitygroup.com/company/international-markets/

4 Accessed 30 June 2023: https://vitality.international/ambition-2025/our-commitment.html

5 A noteworthy exception, in which insurtech is used in directly interventionist ways to mandate or restrict certain behaviours, comes from cases like corporate wellness programmes and commercial vehicle fleets where insurtech products can be used to monitor, discipline and control workers – especially in places like the United States where people depend on their employers for health insurance (Hull & Pasquale, 2018; Levy, 2022; Nopper & Zelickson, 2023). In these cases, insurers are able to take advantage of workplace power dynamics by making bosses enforce the demands of insurers on workers.

6 Accessed 14 March 2024: https://www.discovery.co.za/vitality/vitality-research

7 Respectively: environmental, social and governance; diversity, equity and inclusion; and corporate social responsibility.

8 Accessed 30 June 2023: https://vitality.international/about-vitality/shared-value-insurance.html

9 Accessed 30 June 2023: https://vitality.international/about-vitality/shared-value-insurance.html