Inside Covid-19: Cyril speech highlights; Vitality clarity on Comair flights; Levitt’s SA scorecard Ep 34

In episode 34 of Inside Covid-19, we have highlights from Cyril Ramaphosa’s address on the easing in South Africa’s lockdown regulations; answers for the millions of Vitality members wondering whether Comair going into business rescue means the end of their cheap flights; South Africa’s only living Nobel prizewinning scientist Prof Michael Levitt’s scorecard on how his former homeland is handling the crisis; a crisis of a different kind as Airbnb entrepreneurs – who own 22,000 properties in Cape Town alone – struggle to stay afloat; and the invasive measures companies are applying on the office and home lives of their workers. – Alec Hogg

In the Covid-19 headlines today:

  • South Africa’s president Cyril Ramaphosa announced Wednesday night that a number of Level Four restrictions on retail, e-commerce and exercise would be reduced – and that the country as a whole would move to Level Three at the end of May. He also admitted that there had been a number of contradictory and unnecessary regulations and said these mistakes would be rectified. An economic recovery plan is being discussed in cabinet and will be released as soon as deliberations are concluded.
  • South African finance minister Tito Mboweni has earmarked 24th June for his 2020 Special Adjustment Budget where he will share details on the funding and allocation of the R500bn Covid-19 fiscal support package. A note distributed today by National Treasury reminded us that R130bn of this will be via reprioritisation of money that was tabled in February’s Budget Speech. Of the R500bn; a chunky R200bn is for a credit guarantee scheme; R100n for job protection in SMEs and informal businesses; R70bn via tax deferrals; and R50bn as additional social benefits.
  • In his appearance before US senators, Anthony Fauci, the scientist leading the fight against Covid-19 in the world’s hardest hit country, emphasised the need for caution and testing as lockdowns are eased. Dr Fauci also warned that serious risks would continue at least until September when American schools re-open. Meanwhile US president Donald Trump publicly backed Elon Musk’s decision to re-open Tesla’s California plant in defiance of local authorities. Trump’s press secretary said the president’s concerns over the lockdowns extended beyond the economic impact, warning also of mental and physical harm to people.

Dinesh Govender, the chief executive of Discovery Vitality. I had a fascinating chat with your colleague Gareth Friedlander who told me that if you are a Discovery Diamond member you have a 41% less chance of going to the hospital for Covid-19.

Yes, very excited about what Vitality stands for. We’ve always been passionate about being our members’ partner on their journey to good health and I think intuitively everyone knows if you stay healthy if you exercise you boost your immunity. I mean the data is still early but it’s very clear, vitality members who are engaged, exercise regularly, eat healthily, it doesn’t prevent you from contracting it but if you contract it you definitely have a lower risk of hospitalisation. You stay in good health because you’re exercising and eating well. It just reinforces our core purpose. Discovery’s core purpose is to make people healthier and enhance and protect their lives. As the head of Vitality, we view Vitality as the heart behind the Discovery shared-value model which says if we do the right things for clients if we get them to exhibit the right behaviours, it lowers their risks which makes us a successful insurance company and you end up with a more productive society. That’s on a general basis, but if you take just a pandemic like Covid, this behavioural risk is so in your face right. The nature of risk even in an infectious disease outbreak is completely behavioural in terms of handwashing, social distancing, use a face mask, but also while you’re in lockdown not resorting to all the unhealthy behaviours. Eating well and still staying fit even if you can’t go out for a run.

How are you able to monitor how Vitality members are behaving in lockdown?

The lockdowns really disrupted our members’ gym routines and their travel plans and we’re working with those partners in terms of how they’re doing and when they’ll get out of this situation. In the meantime, for Vitality we’ve said we’ve got to remain relevant because it really is a problem if people stop moving and resort to eating comfort foods all the time. If people get anxious or depressed through this period we want to figure out how we can help reverse or prevent it from happening. What we’ve done is a shift from the physical to the digital when it comes to exercise. So many of our members now engage in exercise using heart rate monitors. We have an Apple Watch benefit, a device benefit at Sportsman’s Warehouse and TotalSports. Members use those to get heart rate devices and then we were able to track their workouts at home. What we do with those is we’ve created a home workout channel where if you’re where your heart rate wearable and do one of those home video workouts you’re going to get 300 points because we’ve boosted your heart rate over that period, we’ve called it Vitality at Home. Now some of our members went into lockdown without getting a device, they still got their smartphone where they can track their 10,000 steps a day and get their points. Technology has really helped us over this period, we can monitor who’s actually participating in-home workout videos and give them at least 50 points for the home workout video, if you’re watching the home video trying your best to stay in there you’re going to get 50 points. We want you to exercise. We want to acknowledge that through the points and we want to encourage you during this period by giving it the right types of rewards. While you can’t book your next flight right now what you can do when you’re earning these vitality points getting boosting your status and getting there is getting 50% off at Woolworths and Pick n Pay healthy food and on health care at Clicks and Dischem, TotalSports and Sportsman’s. We’ve doubled all of our health care, healthy food and healthy benefits over this period so people feel rewarded. We’ve added Netflix and Box Office to our active rewards platform and we’ve discounted them. A R250 Netflix voucher costs 1,500 Discovery Miles as opposed to 2,500 Discovery Miles, and a Box Office voucher instead of 350 Discovery Miles costs 150 Discovery Miles. All of a sudden we’re still pushing and encouraging you to exercise and have created all these avenues to do so, and we found some rewards which will make you very happy because they are partners who are open and who are contributing to your good health.

What’s the feedback? Are you able to see whether your members are exercising more during this lockdown period or less?

The results have been promising. I think people have been looking for good news and been looking for motivation in a period when you know frankly a lot of the news is around watching the infection go up every day. What we’ve seen is our most engaged members have increased activity over this level. We’ve seen people using their heart rate devices, earn more points than they did before lockdown. Where we’re trying to still continue to motivate members who were doing just one or two workouts a month, those are the members who have seen a dip in activity and we’re trying to get back up there. Overall members who have been exercising more days right now than they did before which is great and it means that the programs are working and it’s benefiting them, that’s made us very satisfied with the results. One other way in which we’ve been quite reassured is normally when you go into social media especially Twitter and Facebook, if you put down one of our typical vitality posts you get quite mixed results and social media is a place where people can be quite harsh in terms of their request for service, it’s been really heartwarming whenever we announce some of the changes we’ve made over this period to help remain relevant for members health journeys the amount thank you’s we’re getting on our various platforms has been really heartwarming. I would like to take this opportunity to thank our members for engaging with us remaining our partners for this period. 

How many Vitality members are there?

We’ve got 1.8 million members right now if you just look at the health base but if you count Health, Driving and Vitality Money, which is where we’re trying to change all the behaviours, we’ve exceeded the 2 million mark. Bank is still a relatively new business and is growing and so is Insure, those numbers are still ticking up. Even during lockdown, Discovery Bank numbers are ticking up because members of Discovery Bank don’t just get the regular healthy food benefit, they get a boosted benefit. If you’re a Discovery Bank member right now over lockdown you’re getting healthy food for free if you’re a highly engaged member with a black credit card or a purple credit card. Bank continues to grow. We’ve got over 2 million vitality members across the 3 programs and we started to award members across the programs as well. One of the absolute killer benefits over this period is we’re allowing members to monetise their exercise directly. If you do work out over this period you get 300 vitality points at the end of that week We are depositing 300 Discovery Miles into your discovery bank account. It’s all coming together quite nicely right now. 

Changing habits, no doubt people have now got the opportunity, being at home to really focus on what the program gives them. I have heard that Comair has gone into business rescue, how long have they been partnered Vitality for? 

Comair has been a long-term partner of ours, over a decade ago when we launched our travel rewards benefits. You know we’ve had a great relationship with them. They’re not just our partner in terms of the airline Kulula and British Airways, but booking of all your other flights and holidays also happens on the Comair platform. Really long term partners. We’ve been in close discussions with them and I think the business rescue process was a necessity of the times in terms of the best way to preserve cash and figuring out how to get into the skies again later this year in a successful and more important sustainable manner. We’re 100% committed to them as partners and very optimistic about the process. We’ve spoken to them and their business rescue practitioners who were helping them before they went to this process. The intentions to get back into the skies is clear. If and when that happens our members will continue to book with them as members, bookings or credits with them right now will be able to book in future at no additional charge. We’re hoping that’s the outcome.

What if they don’t?

That’s the process and that’s the uncertainty around any of the processes with any of the businesses over this period. I’m optimistic about it but there are no guarantees for any of our businesses over this period, and we wish them well and we’re very supportive.

You’re standing with them. As far as the Discovery Vitality members are concerned, obviously they can’t book anything now but do you have any idea of when Comair might be back?

It’s quite a structured process. The greatest uncertainty is really around how lockdown progresses, how the Covid pandemic progressed inside Africa and when the government responsibly opens the skies again. In terms of the Comair business rescue process, that’s quite clear and gives one great comfort. The business rescue process has begun. The business rescue practitioners will announce their business plan on the 19th of June. So it’s quite a structured process and then they will begin implementing that plan in terms of restructuring the finances of the organization etc. It will become quite clear in time what the process is. The great uncertainty for any business right now is really around how lockdown progresses, how the pandemic progresses, I’m sure there’ll be an uptick once we are through all of this. The question is when will that happen and how will that happen.

You’re a chemical engineer with a degree from Harvard University. How do you end up running what is essentially a marketing organisation? 

Discovery is the most incredible company, my entire life I feel I’ve been attracted to positively difficult challenging situations. Discovery and Vitality, in particular, is just a place we can have a huge impact. It really is a company built on a profound core purpose. When we’re sitting in an ExCo meeting with Adrian Gore and Hylton Kallner and the rest of the founding team you get a real sense that this is not a place where people are trying to manage the share price. They’re trying to do the right thing for clients and for society. I was absolutely drawn to the energy of the place and the ability to do things on the fly if it feels right. I work with an incredible team and vitality, look at what the team’s being able to do to transform from a gym and flight based sort of incentivised behaviour change program to one which is incentivising online workouts in your home giving you Netflix vouchers and giving you free healthy food during the lockdown, and to do all of that with 98% of our staff at vitality working from home remotely has been nothing short of miraculous. As an engineer, I find this an incredible feat and very exciting and truly privileged to be part of it.

We ran a fascinating webcast that Adrian Gore, your CEO and co-founder, did a couple of weeks ago. In it he said the scientists and the engineers are going to be playing a bigger role in society going forward. That is interesting because up to now it has been more of the accountants and the marketers.

There’s a role for everyone and right now it’s less about the labels of the profession and more about what they are they building. How do you build and how do you remain creative over this period? It gives me great comfort for the types of learning that’s happening out there right now. The last few years in all education spheres people have been talking about creativity and communication skills and all of these things which are less formulaic around just sit in your cubicle and do XYZ. If you think about how the world will be, how South Africa will be, how Discovery will be – post the pandemic and during and how strong each of these spaces will be. It requires creativity, innovation, it requires actuaries to be marketers and engineers to be businessmen and doctors to be leaders. It does require people to think outside of the boxes that they have been working in. If you look at all the glimmers of hope around the world they’ve typically come from people coming up with new solutions based on a deep and profound respect for the science behind it as opposed to ideologies that are baseless. It gives me great comfort that the world will think more about science and the world will end up being much more thoughtful around how we interact with our environments in the coming years.

So there is an upside to all of this? 

There must be an upside to all of this. If we look at what happened in the previous 100 years and just where we were before Covid, society has progressed so far in terms of getting rid of poverty, educating masses of billions of people compared to where we were 50 years ago. If you’re looking for an upside for Covid, it’s hard to sugar coat, this is horrible. It’s a true atrocity in terms of just what it’s doing to particularly the poor and people on the poverty line, it really is hard. It’s creating huge anxiety, but as the human race we will come out stronger on the other side and we’d have some learnings. I hope some of those learnings are not just around sort of fact-based creativity and innovation and building but it’s also around some sense of humility in terms of respect for the environment and thinking more broadly than just the bottom line.

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