Apple is seeking to cooperate with John Hancock, one of the largest life insurance companies in the United States, to sell discounted Apple Watches to the insurer's new and existing customers, helping them maintain a healthy lifestyle.
Customers who buy life insurance get the chance to receive a free Apple Watch worth $299—just how tempting is that? Whether Apple and the many insurance companies can achieve a win-win and open up a new sales channel is something many people are unsure about.
Strict conditions for getting it free
It is reported that all customers of John Hancock's Vitality program have the opportunity to apply; the program aims to provide benefits and rewards to people who maintain a healthy lifestyle. Taking its UK customers as an example, under the cooperation between the two companies, from October 25 to December 31, eligible UK members who sign up for the insurer's "Vitality Health" or "Vitality Life" insurance plans can each obtain a GPS-enabled Series 3 Apple Watch for between £0 and £59.
John Hancock is a company under Canada's Manulife Financial Group, which has been in the insurance business for over a century with operations across Asia, Canada and the United States. A few years ago, Manulife gave Apple Watches to some customers, but the condition at the time was that those customers needed to hold more than $2 million in life insurance with the Manulife group. Now, the Manulife subsidiary intends to extend the program to all users.
The new conditions are: Vitality program members must exercise regularly over two years; if they earn at least 160 Vitality activity points each month, they can get the Apple Watch for free. If they do not exercise regularly, they must pay for the Apple Watch in installments.
Vitality program members can earn points through walking, running, cycling and other forms of exercise. Among them, 12,500 steps in a day earns 8 activity points; cycling for 30 to 59 minutes earns 5 activity points. These customers' exercise data are synchronized and recorded on Apple app devices. If they really cannot meet the required exercise points, the worst case for a member is paying £12.5 per month in installments for 24 consecutive months, making the final price of the Apple Series 3 watch £329.
In addition, customers who receive the watch may not resell it, and there are caps on users' daily and weekly exercise points: a maximum of 8 activity points per day and no more than 40 activity points per week.
The insurance company said this cooperation with Apple not only benefits Apple but also encourages customers to maintain a healthy lifestyle at all times, while the insurer's claim rate will also decrease—a good thing for all three parties.
Targeting the health insurance population for "bundled sales"
Apple is currently seeking to carry out such bundling cooperation with more insurance companies.
It is reported that since August, Apple has been in talks with several health insurance companies. In addition to John Hancock, Apple has also held a series of discussions with health insurance giant Aetna, because Aetna has 23 million customers worldwide, and Apple hopes to distribute Series 3 watches to these customers.
Some analysts said the Apple Watch previously accounted for less than 5% of the company's overall revenue, and if it can open up the insurance company sales channel, Apple Watch sales will surely increase significantly. John Hancock recently conducted a survey of customers on life insurance and found that about 20% of them plan to buy an Apple Watch. The survey also found that among people without life insurance, 50% said they would buy life insurance if there were a discount.
An industry insider told an International Finance News reporter that Apple has been paying attention to insurance companies for a long time, and its involvement in health insurance was not a whim this year. Back in 2014, when it was popular in the market for large companies to provide insurance benefits to their employees and urge them to develop healthy habits—and even when health-tracking wristbands such as the Xiaomi Mi Band were launched—Apple was already studying how to explore cooperation: they collected data and shared it with insurers and other medical service institutions. But at the time there was controversy over suspected leaks of customers' personal privacy data, so Apple did not bundle its products in a high-profile way.
In view of these many concerns, Apple now looks for insurance companies' health programs as bundling targets. To implement its "bundling" strategy, Apple released a new mobile application platform back in 2014 that can collect and analyze users' health data. Named "HealthKit," the platform can integrate data collected by other health apps on the iPhone or iPad, such as blood pressure and weight. After the HealthKit feature appeared in Apple's iOS 8 system, Nike became a major manufacturer in the health-tracking device field. Later, Apple negotiated with major U.S. insurers such as UnitedHealth and Humana over the HealthKit project, but no concrete cooperation plan was ever put forward—until the formal cooperation with John Hancock.
Insurance may be the last straw
This year, Apple attaches great importance to the wearables market; data it released in August show Apple Watch sales are expected to reach 15 million units.
In fact, looking back at the development path of the first, second and third generations of the Apple Watch, it is not hard to see that the road has not been smooth. Specifically, the first generation sold fewer than 5 million units due to its high price; the second-generation Apple Watch added GPS chip positioning and water resistance and was paired with sporting goods, which boosted sales, but the results were hardly optimistic, and specific sales figures were never released; and although the third-generation watch is equipped with a baseband processor, it cannot fix the power consumption defect, so battery life remains a problem.
In the view of industry insiders, Apple's cooperation with insurance companies is also a matter of having no alternative, because in the fitness band and smartwatch field many companies are already facing the crisis of bankruptcy, collapse or announced discontinuation—for example, the veteran band maker Jawbone is already in bankruptcy liquidation, fitness band sales at Xiaomi and Fitbit have declined, smartwatch sales at Samsung Electronics, LG Electronics, Huawei and Motorola are sluggish, Intel has shut down its wearables R&D division, Microsoft is said to have canceled its fitness band project, and ASUS has decided to exit the band market.
Insurance companies seem to have become the Apple Watch's last lifeline, but whether it can use this to make a glorious turnaround is still hard to determine.
Today, the Apple Watch is also embroiled in litigation. The latest news shows that a company called Uniloc recently sued Apple in court on the grounds that the GPS motion tracking system used in the Apple Watch infringes its patent.
Source: International Finance News 2017-10-25