Client Type:
HealthTech Startup in partnership with a Health Insurer

Geography:
India

Objective:
To assess whether policyholders engaged through a digital lifestyle rewards platform, which promotes healthy plant-based eating habits, result in improved health insurance profitability.

Background

A growing HealthTech company operating a lifestyle mobile app partnered with a health insurer to explore an innovative proposition: offering incentivized insurance to users who follow plant-based nutrition. The app tracks diet patterns and promotes healthier food choices, aiming to attract a low-risk insurance pool. The client engaged Actuaria Consultants to evaluate whether policyholders acquired via this app could drive a favourable experience and profitability for the insurer.

Key Challenges

• Quantifying Morbidity Advantage: Estimating actuarial impacts of improved nutrition on specific illness categories.
• Scepticism Around Pilot: Convincing insurers that lifestyle-linked cohorts could offer a credible underwriting advantage.
• Absence of Historical Data: Needing to rely on global clinical studies and high-level actuarial judgment in the absence of insurer-specific past experience for this channel.

Our Approach

Actuaria designed a high-level 5-year profitability projection model to estimate the expected impact on insurer margins for this digitally sourced cohort. The model incorporated:

• Standard assumptions on commissions, claims, and expenses
• Adjustments to reflect expected behaviour and morbidity of app users
• External research linking plant-based diets to a reduction in chronic diseases like diabetes, heart disease, and cancer

Improvements were introduced across several parameters individually to isolate their impacts:

• Claims Cost: Assumed 22% and 20% lower claims for chronic and other non-communicable diseases, respectively, based on clinical literature.
• Acquisition Expenses: Higher in Year 1 but lower from Year 2 onward due to digital channel efficiency and cross-sell potential.
• Lapse Rate: Expected 10% lower lapse due to app engagement and better customer stickiness.
• Risk Discount Rate: 1% reduction assumed for provisioning due to more stable experience.
• Investment and commission assumptions were retained as per regulatory and market norms.

Results Delivered

A waterfall profitability analysis showed:

• Base Profit Margin: 6.5% (present value over 5 years)
• Final Profit Margin with all improvements: 17.6%
• Net uplift due to platform-linked sourcing: Over 11% increase in profit margin

Breakdown of major contributors to uplift:

• 3.6% from lower chronic disease claims
• 5.6% from improved experience in other illnesses
• 0.8% from acquisition cost efficiency
• 0.6% from better retention
• 0.4% from provisioning assumptions

Figure: Profit Impact Waterfall due to Healthtech Sourcing

Impact

This actuarial evaluation enabled the HealthTech company to:

• Demonstrate a credible profitability advantage to prospective insurer partners
• Build confidence around a pilot structure for incentivized health insurance
• Provide a replicable framework for testing insurer-specific scenarios

Why Actuaria?

With a blend of actuarial and technology expertise, Actuaria delivered a compelling, research-backed financial assessment for an emerging digital health model—helping unlock innovation in product design and underwriting in the Indian insurance landscape.