030914 Discovery CEO Adrian Gore presenting the company annual results in Sandton North of Johannesburg.photo by Simphiwe Mbokazi 3

Discovery Holdings had found a strong correlation between its innovative behaviour-based model and its business growth, the health insurer’s chief executive, Adrian Gore, said yesterday.

The company’s model of trying to address some of the societal problems in an innovative and engaging way was finally paying off, he said. Some of the initiatives, including the company’s loyalty programme Vitality, were also being tested in global markets such as the UK, US and Asia.

“Discovery’s business model is a powerful asset as it enables a composite view of a client’s risk behaviour, which can include nutrition and exercise habits, as well as their driving behaviour.

“By rewarding better behaviour, the actuarial dynamics improve considerably, resulting in savings across the business,” Gore said.

One trend that Discovery had picked up when it came to better behaviour of its clients was that people who were part of Discovery Insurer were becoming better drivers. “We have even [noticed] that women were actually better drivers,” Gore said.

For the year to June, Discovery was able to lift its normalised profit from operations by 23 percent to R4.9 billion with new business growth of 15 percent to R12.1bn. Headline earnings grew by 24 percent to R3.4bn.

“We are finding a very strong correlation in what we are trying to do and the results we are achieving,” Gore said.

Discovery Health in South Africa exceeded expectations with operating profit up 10 percent to R1.86bn. However, Gore was concerned about the continuing increase in health-care inflation, saying it made health care unaffordable.

The health-care environment remained complex, characterised by an increasing disease burden, a deepening shortage of physicians in key disciplines, continued upward cost pressure and legislative reform, the group said.

The division was able to increase its new business by 4 percent to R5bn, with lives under management for all schemes growing to 2.9 million.

Its Discovery Life division grew operating profits by 23 percent to R2.5bn, driven by new business growth of 6 percent to R2bn.

“Discovery Life’s performance further validates the efficacy of the model, and its unique shared value attributes.

“The model not only creates value for clients as they experience better value for money and policyholder returns, but the insurer benefits from superior actuarial dynamics and higher profit margins,” he said.

The group’s secondary market, the UK, managed to lift profit by 33 percent to R628 million with new business growing by 35 percent to R2.1bn and a member base of 800 000.

The scale and relevance of the UK business reflected a vision to build an exemplar of the South African model and assets and had manifested in the best business in Britain, said Gore.

Discovery’s share price gained 2.49 percent to close at R99.30 on the JSE yesterday.