iQo > Banking & Insurance > Why should insurance companies develop prevention services and initiatives?

Why should insurance companies develop prevention services and initiatives?

Our insurance industry experts bring you a series of articles on the theme of "Strengthening risk prevention: a winning strategy for insurance companies?

In this 1st article (the second article can be accessed at the bottom of this page), we present the benefits of preventive actions for insurance companies through 3 dimensions at the heart of the major challenges facing the sector: reducing claims, strengthening customer relations... and social responsibility. social responsibility.

1. Reduce the claims burden

In principle, preventive actions help to limit the frequency and severity of claims, thereby reducing costs for insurance companies and enabling them to maintain a good level of underwriting profitability.

Particularly in periods of inflation, effective preventive measures deployed at the right level can also help maintain insurability and accessibility of cover for certain risks, by limiting rate increases and/or maintaining claims levels at an insurable level. In France, general insurers could save between €2.6 and €4 billion by implementing prevention solutions (source: KPMG).

Let's take natural disasters as an example. Between 2000 and 2023, the cost of claims linked to natural disasters tripled in France, reaching €6.5 billion in 2023 (source: France Assureurs), putting insurers' compensation capacity under pressure.

By 2050, this burden is likely to double, confronting insurers with the limit of insurability of climate-related losses, which will only be possible through an upward revision of premiums, potentially beyond the financial capacity of some households. Prevention is one of the solutions to be implemented in order to reduce the occurrence of claims, and if this is not possible, to mitigate their impact.

Examples of loss prevention actions

A number of players have embarked on preventive actions and, in some cases, are beginning to reap the benefits.

Thanks to its information tools in the event of threatened climatic events, free of charge for customers, Generali claims to have saved between 2 and 5 million euros on home insurance by 2023 (source: l'Argus de l'assurance). For its part, in 2023, AXA launched a forest fire risk prevention service for businesses in France, based on predictive data (previously historical) through its "Digital Commercial Platform" (source: AXA website).

To reach a younger audience, some insurers are showing their ingenuity by combining prevention and technology. As an example, MAAF has collaborated with Fortnite to create "Home Run", a game that takes a playful approach to road safety, the leading cause of death among 18-24 year-olds (source: l'Argus de l'assurance).

Less playful but just as useful, Allianz has teamed up with Bumpair, designer of an ultra-compact air helmet, to protect users of soft mobility. The company also offers to finance training courses for young drivers to reinforce their good driving reflexes, combined with a discount on the insurance premium.

2. Enhance brand awareness and strengthen customer relations

By offering preventive services, insurers demonstrate their commitment to their customers, offering them a service and a relationship that goes beyond simple payment or handling of the claim, thus strengthening loyalty and customer satisfaction.

The services offered provide a concrete illustration of the insurer's commitment to certain themes, and benefit from additional notoriety and coverage. The services offered become an important differentiating factor, if not the only one, in markets where the offer is seen as a commodity, or where the nature of the offer is constrained by the regulator or the State (e.g. health offers).

Innovative prevention programs can stand out in the market, attracting new customers/targets and retaining existing ones thanks to a perceptible added value, while others are simply "necessary" to companies' competitiveness (e.g.: prevention component in civil servants' PSC tenders) or their qualification in certain markets.

Finally, the development of prevention services (and services more broadly) can become a source of revenue in its own right, through a progressive monetization strategy. For example, a structuring choice could be to develop a prevention business in its own right, or even a service business in which prevention services can be found, along with a range of related services in line with the company's customer targets or missions.

One example is Apicil, which has turned its Services business into a fully-fledged Business Unit, with the acquisition of Bluelinea, a home assistance service for the elderly. AXA Climate, for its part, offers a range of services: consulting, prevention and Saas-based analysis products (Altitude by AXA Climate), training, etc. All linked to adaptation to environmental change, and therefore to AXA's mission of risk prevention.

Prevention at the heart of the health insurance market

In the strictly regulated, financially constrained and increasingly saturated health insurance market, there is little room for manoeuvre on the health product as an insurance product. The attractiveness of the health product, linked to the level of coverage and the price, is no longer enough. What's more, with the transfer of costs from the Assurance Maladie to the OCAMs, the insurance model risks overstepping its insurability limits. The OCAMs may no longer be able to cover all their financial costs without a rate increase, which may not be affordable for policyholders.

So-called "innovative" cover (payment for alternative medicine, birth allowances, etc.) is no longer so innovative, since it is offered by almost all the players (AXA, Allianz, MGEN, GMF, MAIF, Groupama, Malakoff Humanis, etc.).

In this context, prevention services can be an important differentiating factor, helping to raise brand awareness and strengthen customer relations.

Several players have made prevention a central part of their offering.

Groupe VYV, a well-known player in the field of prevention, has teamed up, through Harmonie mutuelle, with Moodwork, a start-up specializing in mental health and well-being at work, to provide company employees with a prevention tool against burnout. This initiative is part of a continuum of prevention actions carried out by the company for over 15 years.
In the customer area, Groupama offers a range of applications accessible free of charge to all health contract holders, covering a broad spectrum of preventive measures such as encouraging physical activity, identifying risk factors and improving balance and well-being on a daily basis, ...
Malakoff Humanis has set up a 3-step service to identify the risk of developing cardiovascular disease: a detailed medical check-up that can be carried out online, teleconsultation with a healthcare professional and access to the online check-up with results for 10 cardiovascular pathologies.

3. Responding to the imperatives of Corporate Social Responsibility (CSR)

Preventive actions are also part of a corporate social responsibility corporate social responsibility (CSR) approach(Corporate Social Responsibility) approach, responding to regulatory standards and consumer expectations for more ethical practices.

They are also at the heart of the missions and values of certain players in the sector (social protection groups, provident institutions, but also insurers who place their societal role at the forefront of their strategy) and as such form an integral part of their offering and organization.

MAIF, via its Prévention MAIF association created in 1980, runs a number of prevention initiatives with 3 objectives: to raise awareness, inform and educate. These initiatives cover a wide range of topics, from those at the heart of the insurance business, such as road safety and digital risks, to everyday issues such as first aid and bicycle safety.
In 1980, AXA created the AXA Prévention association, whose mission is to promote a culture of prevention. To support small and medium-sized businesses, AXA Prévention has set up the "En sécurité au travail" platform for the prevention of road and cyber risks, and the "En forme au travail" platform for the prevention of health-related risks.
Generali has developed a service, free of charge for the general public, to diagnose the exposure of homes to climatic, nuclear and industrial risks and to propose prevention guides.

From a theoretical point of view, then, everything seems to point to the need to develop a policy of deploying offers and services dedicated to risk prevention.

Unfortunately, there are a number of complications involved in the actual implementation of such a strategy, from knowledge of the services, to their effective and practical use, to the measurability of the impact for the various parties involved.

In our next article next article, we'll look at the challenges involved in implementing preventive offers and services, and how to implement an effective strategy..