South Africa’s biggest health insurance company Discovery Health has joined forces with AIA Group to establish a new health insurtech business, Amplify Health, in Asia, which will operate as a joint venture.
The partnership will operate in Asia, excluding China, Hong Kong and Macau. Discovery will own 25% of the joint venture’s equity, with AIA owning the balance of 75%.
Discovery says the partnership comes on the back of growing demand for healthcare services in Asia, supported by “compelling fundamentals of rising wealth, ageing populations, greater focus on health and wellness”.
The health insurer says consumers in the region will continue to focus on wellness and disease prevention, leveraging technologies such as wearables, activity and fitness trackers, driving the market in Asia to $6.6 billion by 2025, compared to pre-pandemic (2020) levels of $2.3 billion (23% CAGR).
Announcing the deal today, Discovery says Amplify Health will be focused on servicing AIA businesses to drive improved operational and claims performance.
AIA Group is the largest independent, publicly-listed Pan-Asian life insurance group. It has a presence in 18 markets and is a market leader in Asia (ex-Japan) based on life insurance premiums and holds leading positions across most of its markets.
The alliance, Discovery says, combines its and AIA’s complementary strengths, and will see the Sandton-based health insurer transfer its full health technology stack to the joint venture, along with a substantial number of skilled personnel.
Jonathan Broomberg, former CEO of Discovery Health and current CEO of Vitality Health International, has since been assigned as founding CEO of Amplify Health.
“Amplify Health is uniquely positioned to leverage superior technology, digital and analytic capabilities to deliver healthcare solutions with greater convenience, better accessibility and lower costs to customers, whilst easing pressure on traditional healthcare delivery models,” says Discovery.
“Amplify Health also opens up a new, large and high-growth opportunity in health technology services, alongside AIA’s existing leadership position in private health insurance.”
Detailing the rationale of the deal, Discovery says digital healthcare adoption has accelerated as a result of the COVID-19 pandemic, with 96% of insurers in Asia-Pacific indicating their members now use telehealth to access primary physician/general practitioner services.
“Adding to this, the population in parts of Asia is ageing, with close to 850 million people in the region predicted to be over the age of 60 by 2030. This unparalleled combination of shifting demographics, rising consumer expectations, accelerated digital adoption, new advancements in healthtech and significant unmet service demand underpin the strategic importance of Amplify Health.”
Additionally, Discovery says, a key element of the joint venture is an agreement that ongoing innovation and new health and wellness intellectual property (IP) created by both parties will be shared between them, ensuring both Amplify Health and Discovery will benefit substantially from this long-term collaboration.
From a capital perspective, Discovery notes that as a health insurtech and services business, Amplify Health will not carry direct underwriting or distribution risk, and therefore no regulatory capital will be required.
However, it says: “Capital is expected to be required for growth to scale the joint venture and its capabilities – AIA will contribute up to $200 million of Discovery’s share of growth capital over the first 10 years.”
Further, Discovery says: “AIA’s health insurance businesses across the region are anticipated to use Amplify Health’s products and services, and for this Discovery will earn additional performance-based contingent fees over the first 10 years of the contract.
“AIA will continue to pay fees linked to the existing AIA Vitality contract, supplemented by additional fees in return for the assignment of the ownership of Vitality IP to Amplify Health.”
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