AIA, the global insurance giant which recently acquired Sovereign, is set to roll out a new programme that gives cheaper insurance to Kiwis who lead healthier lives.
The programme, dubbed Vitality, encourages people to exercise more, eat healthily, quit smoking and reduce alcohol in-take in exchange for lower premiums and rewards like gym memberships and discounts on healthy food.
The programme was first developed in conjunction with South African life insurer Discovery and is already offered across a number of Asian markets.
AIA regional head Bill Lisle made a flying visit to New Zealand after his company finalised its deal to buy Sovereign from Commonwealth Bank of Australia as part of a US$3 billion (NZ$4.4 billion) acquisition of the bank's life insurance arm.
Speaking to the Herald he said Vitality allows the company to have different conversations with existing and new customers around being healthier and living longer rather than the typical focus of life insurers on the risks associated with how soon a person will die.
Those who don't join the programme or commit to becoming gym bunnies face no change in their premiums, Lisle said.
He hoped to launch the new product by February next year and predicted it would be a game changer, which would disrupt the New Zealand market.
The AIA vitality programme can be linked to a numerous health tracking devices and rewards users according to factors such as the amount of exercise they've done or the number of hours they've slept.
Health tracking by insurance companies is already being applied across a number of international markets and the trend is expected to grow in coming years.
The Vitality programme is, however, only one part of AIA's plans as the company expands its New Zealand footprint during its US$3 billion (NZ$4.4 billion) acquisition of Commonwealth Bank's life insurance arm.
Sovereign is already New Zealand's largest life insurer but combining it with AIA's existing New Zealand business would give it a 33 per cent market share and the scale to launch more products into the market, Lisle said.
"Quite simply we see the opportunity through the scale we now have to really grow the business."
But the move comes at the time when regulators on both side of the Ditch are paying close attention to the financial services industry.
In New Zealand, the Financial Markets Authority has been putting pressure on life insurers to drop the free trips and incentives they offer financial advisors to sell their products to the public.
Australia's Royal Commission into misconduct in the financial services industry is also expected to bring change after a number of damning revelations involving the banks and financial advisers.
Lisle said his company knew the Royal Commission was coming when it did its due diligence on the formerly CBA-owned insurance business.
"The industry goes through cycles. AIA has been in Asia for nearly 100 years. We are in 18 countries. The only way you can do that is working closely with the regulators on the ground."
Lisle expected regulatory reform to continue with the focus on greater customer protections and transparency and said he would work with regulators.
"We have been through two world wars, economic downs, the global financial crisis, but the fundamental reality is most people are under-insured."
Lisle said with more globalisation in Asia there was an increasing mass market which meant people needed more life insurance.
"The fundamental drivers of growth do not change."
In New Zealand, Lisle said there was a gap in the protection market of around $65m with the country third from the bottom when it came to OECD rankings for insurance cover.
"I think this is the start of a journey for us. Adding the two businesses together gives us scale."
He said AIA would use that scale to develop more product innovations and move towards more digitisation so the insurance could be sold in a paperless transaction.
"I think we have a huge role in New Zealand to help people live longer, healthier lives."
The combined businesses will employ around 1000 people in New Zealand and while there would be obvious synergies Lisle said there would be no staff cuts.
"This acquisition was never based on synergies of headcount. While there are cross-overs...there will not be any headcount loss."
Instead, he said there would be year on year growth in staff as it moved more into using technology and artificial intelligence.
Lisle said AIA in New Zealand had previously been a sub-scale business and this acquisition would give it the scale to grow the business.
The Sovereign name will also go over time, although it would stay in place for at least the next six months.
"We are in no rush to change the brand," he said.