It’s built into the DNA at SA’s fastest growing financial services group Discovery that incentives change behaviour. The group transformed the medical aid market by offering people an incentive to self-medicate, eat healthier and only visit medical professionals when absolutely necessary. The principle is being successfully applied to car insurance where the three year old Discovery Insure already has 75 000 vehicles under its umbrella. CEO Anton Ossip says offering rewards for better driving is not only saving clients money, but his user base’s road accident fatality rate is a third of the national average. This is an interview that will appeal to entrepreneurs, drivers – and anyone fascinated by human behaviour. – AH
ANTON OSSIP: The premise of the business is that we could change behaviour; ultimately make people drive better, and by doing so, change the way short-term insurance has worked for decades. I think we’ve been pleasantly surprised at how quickly that actually caught on, and how quickly people change.
ALEC HOGG: How quickly?
ANTON OSSIP: I think it’s quite amazing and I think all our clients give us this feedback. The minute they know they’ve been measured and rewarded ultimately, for how they drive, something changes. Something changes inside you and suddenly, you’re conscious about how you drive. I really think it happens in every single person – the extent to which that change obviously differs. Some people take it more seriously than others do. I have some clients who literally won’t go to one event outside of what they think is good driving, they’re conscious, and if they don’t get full scores they will dissect it, understand it, and work the next month to get a full score. It’s really great to see that level of diligence. Others are less diligent. If they can be more relaxed at the wheel and not be as uptight and aggressive on the road, they’ll take that approach and ultimately, try to be better drivers for the country and for all of our benefits.
ALEC HOGG: How do you get good scores beyond just being a sensible driver? Are there particular habits that you need to develop?
ANTON OSSIP: I think that a lot of it, as you say, is just common sense. A lot of it is just making sure you anticipate the next move, you’re aware of not pulling off very quickly, weaving through traffic, and just aggressively trying to get to your destination on time. While there are times when it’s unavoidable, many times you can just be more controlled about the way you drive. At certain times of the day, driving is more dangerous and while circumstances may dictate that you need to drive in those times, others may say you can afford not to drive in those times. Just being aware of those types of things, ultimately, makes a better driver.
ALEC HOGG: A bit like the whole Discovery approach towards health.
ANTON OSSIP: Exactly, and I think the same with health. We don’t expect every single person to become a triathlete overnight, but just taking some concrete steps towards better health ultimately, will benefit you in the long run.
ALEC HOGG: This is very disruptive and you were previously with Investment Solutions. What pulled you across to Discovery to do this, which seems to be in different area?
ANTON OSSIP: When I was at Alexander Forbes, I was involved in the insurance business for quite a long time so I had exposure to insurance, but I’ve always liked the Discovery model. I like the energy around Discovery…really, just pushing the boundaries and trying to do things differently, and Discover Insure gave us a platform as a team. We really have the canvas to create a new environment for everyone. We’re all driven by the goal we have, which is to save lives. By people driving better, we believe we are saving lives. Our mortality rate is about one-third of what the general population mortality rate is in terms of road accidents. Many people in our client base would have ultimately been involved in a bad accident, had they not changed their habits and by changing that, we’re quite excited about it. As I said, the Discovery business/environment allows many things to be tried. Not everything works, but it gives us the scope to innovate.
ALEC HOGG: What market share have you managed to absorb in the three years you’ve been operating?
ANTON OSSIP: It’s hard to put an exact percentage to it, because the insurance industry is made up of so many different components. We have about R1bn of premium income, about 75-thousand clients or 75-thousand drivers on our policies, so we grew pretty quickly.
ALEC HOGG: Seventy-five: that doesn’t sound like many in the South African population, but in the insured population…
ANTON OSSIP: In the insured population, there’s a long way to go. There are about three million insured vehicles, so there’s a long way to go in terms of growing market.
ALEC HOGG: Presumably, you’re going at the top end for now, with the earlier adopters.
ANTON OSSIP: I think we really appeal to different types of clients. We have different ranges of products. Products where the product is slightly simpler and at a low price point, with less benefit but cheaper, and benefits at a higher level for clients looking for all the bells and whistles that you can get from insurance. There’s a full range of insurance products available, so we’re not really targeting a particular LSM group. It’s anyone who has a car and a house, and wants to insure it…anyone who should be able to insure it, is who we want to attract.
ALEC HOGG: But I guess it would only succeed if people really do change their habits. Have you any data that shows how that is evolving?
ANTON OSSIP: Yes, we do have the data. We do studies where we look at clients when they join and then 12 months thereafter, we see quite a big change – about 20 percent change that we see in terms of driving scores ultimately, measured on a like-for-like basis.
ALEC HOGG: They become 20 percent better at driving…20 percent safer
ANTON OSSIP: On average, yes.
ALEC HOGG: So if everybody in South Africa were to go onto Discovery Insure – every driver – we might be able to improve our accident statistics by at least 20 percent.
ANTON OSSIP: Yes, the current annual stats are about 14-thousand road fatalities per year on South African roads. Our rate of fatality is about a third of that rate. In a hypothetical road, if every single client was driving this way and we could save two thirds of 14-thousand people…think about the economic consequences, the social benefits, and the human benefits. It’s massive. It really has a massive effect. We are hoping to really create this movement of people that want to take ownership of their own risk, but don’t just want to pay an insurance premium, deal with the consequence of a claim and nothing in between. We want to give people the control to actually get involved and to some extent, drive the amount of money they spend on insurance.
ALEC HOGG: Anton, many good ideas and this is clearly a good idea if you’re reducing the fatality rate by two-thirds because of driving more sensibly, and you’re incentivising people to do that. Where did you go from ‘good idea’ to ‘viable business’?
ANTON OSSIP: I think it was a long process of when the idea was hatched within the Discovery business, evolved, and morphed into phases, it was bounced around within Discovery for a long time. It wasn’t just an overnight decision ‘let’s go into short-term insurance. We have a client base. We can sell short-term insurance there’. That’s never been the Discovery approach. It was ‘can we come up with something, which will benefit everyone? It’s going to a good business and a viable business. It obviously has to be’ and make sure all stakeholders are looked after in the process. That took a long time to come to effect. When we eventually did that, we built the business and we saw immediately…literally, from the 1st of June 2011 the phones started ringing and word of mouth started spreading. It’s a different product and people need to understand why it’s different and what they need to do to be a better driver. It’s not money for nothing. You have to ultimately engage in the program. You have to ensure that you’re driving a roadworthy vehicle, you understand the rules of the road, and you understand what being a good risk is all about. If you do that, the benefits are unsurpassed. Our best drivers cannot buy insurance cheaper anywhere else because the amounts they’re getting back every single month on their fuel spend – the benefit as you know, is a 50 percent reduction on your fuel spend based on how well you drive – is an unsurpassed benefit.
ALEC HOGG: You do a lot of research. Dan Ariely comes and talks. You have the Discovery Leadership Summit. In your research of the general population, what percentage of people actually care? Clearly, many people don’t care. Many people don’t really worry or would not go to the effort that you need them to, to benefit from Discovery Insure’s approach. What percentage of the population actually does care?
ANTON OSSIP: I don’t have a percentage, but I actually have a slightly different view. I think many people do care. I think they just need something to help them realise that they care. Many people know that driving badly is not a good thing to do. You have families. You have your kids in the back. People know that you shouldn’t be talking on your cellphone while you’re driving or, even worse, texting while you’re driving, but people still do that. They need some type of incentive or some type of measurement to stop doing that. People like competitions. People like incentives and I think if you give them the right incentive – as long as those appeals to them – they do care.
ALEC HOGG: Can you tell if my wife, who is one of your clients, is texting on her phone while she’s driving
ANTON OSSIP: We can’t. Currently, we can’t tell that. We’re just measuring how the vehicle’s being…
ALEC HOGG: You need to put sensors into the steering wheel, perhaps.
ANTON OSSIP: It’s a good idea.
ALEC HOGG: What about disruption, generally? This is right at the core of what you’re doing. Have you studied other disruptive models or people who write on it?
ANTON OSSIP: We do a lot and we do a lot of research and studying on other models, and we do a lot of work with people such as Dan Ariely and other academics globally, to test our methods, to see what changes, try different things, and ultimately, see what gets the best effect. We’re constantly doing that. We’ve been doing it for years within the Vitality business and we’re doing this now in the Vitality Drive – the drive equivalent. We are therefore testing many things, currently. We are testing something now on the young market to see what will change people between the age of 18 and 25, and get them to be better drivers. We know a high rate of accidents happen in that age group and it’s an age group in which, we cannot afford to lose more people. We need to do something, but how do you change an 18 to 25-year old view to a 40 to 50-year old.
ALEC HOGG: Where are you looking for the young?
ANTON OSSIP: Where are we looking in terms of changing?
ALEC HOGG: Yes, where are you looking for information to be able to implement it for changing the behaviour of the young people?
ANTON OSSIP: We’re currently running a program called The Young Adult Plan where we’ve attracted young adults to join our program and we’ve given them an enhanced level of incentive – an enhanced amount of cash, which they get back every six months up to 25 percent of their premium. We incentivise them based on how they drive and when they drive.
ALEC HOGG: Is it by invitation only, or can anyone join?
ANTON OSSIP: Anyone can join in that age group of 18 to 25. Whether they’re a standalone person of that age on a policy or whether they’re part of a parent’s policy, we give the parent information on how their kid’s driving on of their vehicles so that they can almost be a coach to their child.
ALEC HOGG: Is it too early to have any assessment or any feedback on that?
ANTON OSSIP: It’s still growing, so that part of the book’s still growing, but we have started seeing some good effects from it. We’ve started seeing people who were driving very late at night. On the program, they start taking taxis and other means of transport because we know there are too many drunk drivers on the roads at that time, so if we can hopefully get them off the road if they were planning on drinking and driving, that would be a start. We are seeing that type of effect coming down, but it is a bit too early to see the full effect of it.
ALEC HOGG: Anton, there are, no doubt, entrepreneurs or would-be entrepreneurs listening to this thinking ‘if only I could sit in on some of those meetings at Discovery to understand what disruption’s about, and to understand how I can do things differently, change the world, and make money in the process’. How would you advise someone like that? What kind of books should they be reading or where can they start learning and understanding these key issues, which drive your business?
ANTON OSSIP: It’s a difficult one. I guess there are many good stories out there: ‘Disruption within the apple’ – the apple story is a great book to read in terms of just pushing the boundaries on technology. There are many other good stories like that, so I think that’s probably a good place to start. I think the environment…certainly; I found being in an environment that is always looking to challenge things, no matter what it is. Whether it’s an operational procedure or something that will benefit a client from a product development perspective: being in that environment makes you think differently. To some extent, you need to be exposed to the right environment. I think it’s very difficult to just… Some people have the ability to just think by themselves and disrupt. Others need to be in a team effort to do that.
ALEC HOGG: Take the lead. Jump in.
ANTON OSSIP: Take the lead. Jump in. Get involved in different businesses. Try things. The world of technology opened up many opportunities for people to develop global businesses from their bedrooms, so I think the world has changed in terms of accessibility of starting disruptive and innovative businesses.