Discovery bursts with vitality

Health insurer Discovery Holdings has experienced what group CEO Adrian Gore describes as a seminal year - the group produced a particularly strong financial performance, with operating profits up by 32% to R2.838-billion and embedded value per share up by 19% to R48.45.

This despite economic uncertainty and volatile markets locally and internationally.

The significance of the past year, according to Gore, was the progress Discovery made in furthering the development of the Vitality framework and its applications locally and internationally.

"We've bedded down our business model into a 'repeatable' construct that underpins our expansion into new markets," he said.

Vitality, Discovery's science-based health programme, forms the foundation of all Discovery's businesses and its ability to replicate the Discovery model successfully in new markets.

Gore said: "We've done a considerable amount of work during the past year on the Vitality model to ensure its repeatability in markets such as China, the US and the UK.

"We also applied this model as the basis for Discovery Insure, launched in May 2011, applying the principles of behavioural economics to the science of driving, thereby giving consumers more value.

"Though still embryonic, this model forms the foundation for the internationalisation of Discovery's assets and business," Gore said.

Discovery's new business, HumanaVitality - a joint venture with US insurer Humana - which was launched on July 1, has been well received, with more than 480000 members committed to Vitality in the US, bringing the total committed Vitality membership in the US to 680000.

According to Gore, Discovery Insure's strategic rationale for entering short-term insurance was to leverage its behavioural economics experience built off the Vitality chassis to encourage good driving behaviour and road safety.

Discovery Insure launched in May and the market's receptivity towards it has been positive. In the third month since the launch, average daily new business API exceeded R1-million.

"Discovery's intent to further its integrated model through alternate business model applications of Vitality has been successful, with 98% of Discovery Insure policyholders having a Vitality policy, more than 80% being Discovery Health members, more than 60% having a DiscoveryCard, and more than 35% having a Discovery Life policy," Gore said.

"Going forward, Discovery Insure will focus on driving new business volumes, thereby accelerating mainstream adoption of the technology, and operationally delivering on the distinctive service platform. The goal is a societal one, making good driving within everyone's grasp, and making South Africa's roads safer for everyone's benefit," Gore said. - I-Net Bridge