So, what do video games have to do with insurance?

Blank stares. That’s usually the first reaction people at an insurance conference give when I tell them that we make video games. But video games can help lower insurance costs across the industry, gather better data and help make us all healthier and happier.

 Let’s start with the problem of Obesity. In the USA, over 74% of people are overweight1, and 36% are obese [2]. That number is rising [3]. Obesity and its cousin, inactivity have real costs. They are estimated at $2 Trillion per year worldwide [4] and cost the US workforce $576 billion per year. That’s a lot of cost for those extra fries. 

Corporate America started to pay attention to its employees’ well-being with the emergence of Employee Assistance Programs in the 1950s [5]. And a further focus on worker’s health occurred as perceptions that the federal government was responsible for citizens health shifted towards employers taking responsibility, with the 1974 Employee Retirement Income Security Act (ERISA), stating minimum guidelines for healthcare plans in private industry. [6] 

This emphasis grew with the US government’s Healthy People 2000 and Healthy People 2010 initiatives, and today a majority of companies (80% of employers with over 1000 people [7]) offer a wellness program. 

But all wellness programs are not created equal. US corporations spend $878 per employee per year on ‘Wellness,’ [8] but often with little definitive outcomes or definable ROI. Corporate America knows wellness can save them money and give them a healthier and happier workforce, but a spray and pray approach of corporate cash leads to less than optimal outcomes.

It’s one thing to throw up a bunch of content and on a website and send busy employees a link to a wellness portal they can browse in their own time. It’s a whole different challenge to get employees involved, motivated and to reap the benefits a well-designed program can bring. 

 While “employee wellness programs are evolving into more holistic well-being strategies.” [9] And for a good reason, employees are healthier and happier when all their needs are taken care of, a significant component of wellness is encouraging exercise, and this article is going to focus on encouragement.

‘If you build it, they will come’ has rarely been an effective sales solution and the same is right with wellness.

So how do you encourage people to get involved in the company wellness program? Just like getting kids to eat their vegetables, the carrot and stick method is undoubtedly live:

The Rand Corporation findings from a recent survey [10] conclude that offering incentives for employees to participate raises the median rate by 20 percentage points, from 20 – 40%. And if the rewards are substantial (over $100), the participation rate jumps again to 51%. Adding penalties for non-participation is even more effective, boosting the participation up to 73% in the findings.

However, while the use of fear, fines, and penalties may be a great motivation for engagement to the wellness program, it tends not to be the greatest of recruitment tools for the company as a whole, and as such, we will leave it out of this discussion.

Rand’s other findings? “While incentives seem to be effective at increasing program uptake, they are not a panacea. Offering a rich, well-designed program is almost as effective at boosting employee participation rates as incentivizing employees to join more-limited ones.” Making fun and engaging platforms drives participation rates higher than incentives alone – median participation goes from 40% to 59% if the program is well designed.

Gamification

Although not the first company to use it, American Airlines introduced the wider world to gamification with the introduction of AAdvantage and airline miles in 1981 [11].  It became successful. Very successful. By 2005, The Economist noted that 163 million people collect air miles, and “the total stock of unredeemed miles was worth more than all the dollar bills in circulation.”[12] 

The psychology of completing tasks, leveling up and gaining status is powerful stuff. Entire websites are filled with stories, confessions, tips, and tricks of what we do to obtain and keep those miles and that status. 

The great thing about gamification is that it can be applied to almost anything. The psychology works regardless of the task being gamified, whether it’s bashing buttons, increasing loyalty to a brand or encouraging manual tasks. Scientific meta-studies of gamification conclude: “results of this systematic review indicate that gamification positively impacts engagement”[13] 

Gamification can also be applied to exercise. One study focusing on gamification, work out apps and exercise found:

“The majority of the participants… perceived that an experience of gamification in using the application had affected their personal exercise motivation positively” [14] and in another:

“employing wearables activity trackers for gamification of exercise and fitness is feasible, motivating, and engaging.” [15]

In a further study relating to a website encouraging exercise for those with Arthritis, the authors found:

“Gamification and online social support were also associated with increased physical exercise over time. Looking to this effect from the gaming part, the increased physical activity aligns with a similar observation reported by Hamari et al. [16] for a gamified platform in the context of fitness and exercise websites.” [17]

and

“Physical activity increased over time for patients having access to social support sections plus gaming”

So, there is substantial evidence to suggest that gamification encourages exercise, especially when paired with a convenient smartphone app. Anecdotally, anyone who has worn a wearable, and 51% of Americans have used one, [18] know what it’s like to fervently check one’s stats and the satisfying buzz of hitting 10,000 steps with a congratulatory Fitbit shake. 

Wearable apps employ many of the classic components of gamification baked into their UI. Medals, badges, goals, social functions, leaderboards, taunts, and competition are all basic aspects of gamification. 

Mobile Games

Mobile gaming is big business. Purchasing extra crystals or more lives adds up: mobile gaming brought in over $40 Billion in 2017. [19] Mobile gaming companies now employee sophisticated gambling tactics to lure players to play more, pay more and get addicted. 

Gaming monetization has changed with the advent of mobile gaming. The ‘freemium’ model that game developers now regularly employ, allows users to start playing without payment, but offers upgrades or more lives for payment, sometimes known as ‘pay to win.’ A psychological aspect of this is the use of in-game currency, usually gold, crystals, or a derivative. Thereof, which the user spends on these upgrades, allowing the user to trick themselves into believing that they are not spending real money on the transaction to purchase the item itself, and therefore it is ‘less real.’ This in-game currency, however, must often be bought for real money. Using timed special offers and ‘discount’ strategy that would make a tv shopping network blush. Game designers convince the player that the item that usually costs 1000 gold, which is $20, but for a limited period (sometimes just hours), is reduced to ‘just’ 100 gold, making the user feels they are getting a bargain – a $20 item for just $2! 

The true cash cow is presenting a chance for special in-game items via ‘spin the wheel,’ ‘pick a card’ or random prize (‘loot crates’ in the vernacular) type gambling mechanics to give users an associated buzz of ‘winning’ something meaningful in-game. Extra tries or tickets usually involve real world money once again, and this is often a straight copy of casino psychology. Even better for the developers, there are no restrictions in marketing this to children. [20] The implementation of these tactics helped the share price of EA, Ubisoft, and Take-Two, three of the biggest game publishers, rise six-fold from 2012 – 2017. [21]

The business of mobile video games is similarly a gamble. As this business insider headline showcases “Why 99.9% of All Mobile Games are Not Profitable,”[22] and of the players, less than 2% of them pay any money to the game per month [23], and half of all revenue comes from just 0.1 9% of players! [24] This leads to the amusing/legendary stories of the game ‘whales,’ like the guy who spent $2 million on a mobile game, putting in 90 hours a week.[25] One of our team members worked with Zynga, the largest of the original mobile game makers, and tells stories of anguish and heartache from players calling to report a lost virtual cow…

 Mobile gaming and Gamification exercise collided almost unintentionally, in July 2016’s Pokémon Go. The game was downloaded 750 million times[26] and to showcase its Augmented Reality (AR) feature; the game got users to walk around to ‘catch’ Pokémon. And they did, in record numbers. In the first six months of the game's release, players walked a total of 5 billion miles, and due to this walking, lost 100 million lbs of weight[27]. Take that Jenny Craig.

So what Pokémon did was to tell us, quite categorically, that people will run around like headless chickens for… virtual headless chickens.

And insurance?

Individual risk for cardiovascular disease, diabetes, and cancer are heavily affected by the individual’s weight:

“Excess weight, especially central or abdominal obesity, significantly increases the risk for heart disease. The association of obesity with cardiovascular risk factors, such as high blood pressure, high cholesterol and diabetes, has been well established.”[28]

“The relationship between obesity and diabetes is of such interdependence that the term 'diabesity' has been coined.”[29]

“Being overweight or obese is clearly linked to an overall increased risk of cancer.”[30]

With such a clear and understood link between obesity and health factors/mortality, insurers have responded, offering lower premiums to the health and higher premiums to the obese. And the variation of these premiums is significant. 

NerdWallet.com looked at the cost of life insurance for those of regular weight vs. Obese. Their findings? It costs almost double if you are Obese [31]:

Insurers have found for the end user policyholders; bribery is a useful tool. Health insurers like Cigna and United Healthcare Motion offer, in discounts, rebates, and prizes, roughly $1 per 10,000 steps the policyholder takes.

And it makes sense. If an insurer is going to save (an estimated) $2 in healthcare costs every 10,000 steps the policyholder takes, regarding the reduced risk of disease, then why not share some of that cost saving with the user to encourage them? 

The granddaddy of health incentive programs, however, lies with Vitality, (partnered with John Hancock in the USA). Vitality were early proponents of the ‘bribe users with free stuff to walk more’ business model. Their latest campaign? They offer the policyholder a discounted or ‘free’ Apple watch. If the user hits the required step - over 10,000 steps every day, for the month, they pay nothing for the watch. However, if they do not take enough steps, they must pay a fee towards the watch, up to $16.5 a month. And this goes on for 24 months32. Genius. Vitality buys the watches in bulk at a corporate discount, and then give it their users. If the user increases and maintains their activity level at the high level, Vitality saves $2 per day for 730 days. If the user doesn’t do enough exercise, they pay the retail cost of the watch to Vitality, which has bought the product at a discount. These are the extremes, but for the majority of users? They will increase their exercise, but not enough to qualify for the zero payments. So, Vitality makes healthcare savings from the increased exercise and charge monthly fees towards the total cost of the Apple Watch. 

We know that:

• Obesity and inactivity increase risks of chronic disease. 
• Increased risks of chronic disease have high costs for health and life insurance. 
• The best way to combat this is to get people to exercise more. 
• Gamification works.
• Gamification of exercise works.
• Corporate wellness programs work better and save more money when they are well designed, have incentives and are fun and engaging. 

Let’s look at current attempts to create engaging wellness challenges. Step challenges are not a new phenomenon. One company we visited was putting teams together to hit a 3 million step goal. BP America ran ‘The Million Step Challenge.’ 23,000 employees enrolled in the challenge, and nearly 2,000 surpassed 2 million steps within a year. Those employees were given points towards a lower deductible health plan.33 Our favorite example: An insurer we recently visited that had employees write down on a piece of paper how much weight that had lost since Christmas, and the person who wrote down the biggest number won a cash prize.

More prominent programs offer users health portals they can visit to log in, read health and wellness content, often manually input their steps for challenges, and sign up for classes or assessments that when completed can offer benefits, in the form of prizes and health insurance discounts.

Now back to those blank stares:

We at LVLFi (pronounced ‘level fi,’ an amalgamation of the words LeVeL up and Fitness) believe that by gamifying exercise and the wellness program, we can increase participation rates from tired and busy employees in a company wellness program. We work as complementary to existing wellness programs, working both with and in addition to them, to drive up participation rates, and ultimately, lower costs.

 LVLFi has developed a platform of games, aimed at different demographics, all with employee motivation at the core. Both full wellness challenges, like a ‘Race around the world’ game. In this game the users need to take 300,000 steps in 30 days to complete, competing against each other and in teams for prizes. Long play games, like our ‘Calorie Crush’ game that replicates a match-3 puzzle game, but encourages users to take steps to gain extra lives and keep playing. Our RPG game incorporates the phone accelerometers to get users doing new exercises to progress in a game. We are patent pending the counting of steps and converting this into a virtual currency that can be spent for in-game and real-life rewards. 

Fun games with exercise and gratification techniques motive employees to exercise. These games are lowering the barriers to entry for an exercise program and making it both immediately, and longer term more rewarding encourages users to sign up and get involved. Likewise, lowering or eliminating the ‘pain points’ of a wellness program: in the case of step challenges, recording of steps on a clunky device or the need to manually input steps into a portal on a daily basis, as oppose to automatically recording steps on a user’s phone and saving those without any further input from the employee.

Compared to the writing down on the paper approach of our previous insurer, by offering a front end of fun video games to entice the employee in getting involved, and backend that offers personalized data analytics, that is far more accurate than the user’s memory, one believes this would be a compelling choice. Not only will the employees be healthier and happier, but this can positively affect the companies’ bottom line. 

A great example of what happens when a company implements an engaging wellness program that compiles data and analytics of increased employee activity is Appirio. Appirio worked with their health provider, Anthem who invested $20,000 in the new program. Appirio used some of this money to buy 400 of its employees’ fitness trackers. With the data submitted from these new devices, Appirio was able to reduce its health insurance costs with Anthem by 6%, or $280,000.

the INItial challenges

There is sometimes initial skepticism about the implementation of games to the workforce. Will users spend all their time playing games? This might be great for 20-year-old gamers, but I’m 55, how does this suit me?

But these issues can quickly be clarified. There are already highly addictive games in the marketplace, and yet workers still turn up to the office and work through their day without breaking down into zombified gamers. Good corporate games are designed to be fun to play, but may not need huge amounts of time to get involved and stay ahead. 

Our image of ‘gamers’ may be an overweight millennial with time to spare.  But intelligent game design can make the offerings applicable to many more demographics. Corporate players may not have the time or inclination to learn complex gaming mechanics, but most, if not all know how to play Tetris, Sudoku, or have whiled away a few minutes opening up Minesweeper or Solitaire on a Windows PC. So, games developed to appeal to this type of casual player – quick gaming sessions with very easy to learn rules (import steps, race to the end of the world map), can appeal to a far broader audience than the more engrossing game types.

Of greater challenge are the concerns over data privacy. We at LVLFi minimize this by not collecting user’s names at all, or permanently storing individual user data, only anonymized, aggregate data. However, issues surrounding PII and GDPR in Europe will continue to evolve and must be adequately addressed.

Using gamification applied to exercise makes taking steps and breaking sedentary habits more fun. By creating corporate wellness programs more fun and engaging, more employees will get involved and participate further once enrolled. This offers the benefits of healthier, happier and fitter employees while reducing overall company healthcare costs.

LVLFi gamifies exercise for corporate wellness programs. For a discussion of how our services can benefit your company, email us at: Play@lvlfi.com or visit http://www.LVLFi.com

References

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7. https://www.rand.org/content/dam/rand/pubs/research_briefs/RB9800/RR9842/RAND_RB9842.pdf
8. https://www.businesswire.com/news/home/20150326005585/en/Companies-Spending-Corporate-Wellness-Programs-Employees-Leaving
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16. Hamari J, Koivisto J. Social motivations to use gamification: an empirical study of gamifying exercise. 2013 Presented at: The European Conference on Information Systems; June 5-8, 2013; Utrecht, The Netherlands. http://www.jmir.org/2015/1/e14/#Results
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31. https://www.fastcompany.com/3058462/how-fitbit-became-the-next-big-thing-in-corporate-wellness