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Behavior Change
Philip Morris International Is Now in the Life Insurance Business

PMI’s new insurance company, reviti, offers discounted premiums to people who quit smoking or switch to e-cigarettes, and incentives for continued improvements in lifestyle habits.

Philip Morris International (PMI), which controls roughly 15 percent of the cigarette market around the world with brands such as Marlboro and Parliament, is entering into the life insurance business. Its new life insurance business, reviti, is offering discounts of 50 percent for people who quit smoking, 25 percent to those who switch to vaping with PMI’s IQOS products, and 2.5 percent to those who vape with other devices. The company will initially serve the UK market with plans to expand internationally.

PMI has publicly recognized that cigarettes are addictive and harmful to health. In fact, it has pledged $80 million over 12 years to the Foundation for a “Smoke-Free Future,” shifting its focus instead to e-cigarettes; research suggests that vaping is significantly less harmful to health.

As its sales of traditional cigarettes trend ever so slightly downwards in response to consumer demand for alternatives, PMI has launched an e-cigarette called IQOS, which releases nicotine by heating real tobacco. While still a small portion of the overall business, sales of IQOS are fueling the company’s growth.

We spoke with Andrew Cave, Director of Corporate Affairs for PMI, regarding reviti; and with Chief Sustainability Officer Huub Savelkouls, regarding PMI’s recent decision to abandon its social media campaign.

Why is PMI entering the life insurance industry?

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Andrew Cave: PMI has launched a separate, independent company called reviti. This wholly owned subsidiary of PMI will initially sell life insurance in the UK, with plans to expand into more markets overseas. reviti offers a discount of up to 50 percent on their premiums to reward customers when they quit tobacco and nicotine altogether, and offers a discount for smokers who stop smoking cigarettes and switch completely to a science-backed smoke-free alternative.

We believe that there is currently a gap in the market for life insurance policies for people who smoke and wish to quit. With reviti, we are going beyond tobacco and nicotine-containing products to meet the growing demand from people who want to make positive changes to their lives. This life insurance challenges the status quo in the category by offering highly competitive insurance premiums — so if customers make better choices through improving their lifestyle, reviti will reward them.

How do the discounts reviti is offering to those who quit smoking altogether — eligible after 12 months of not smoking — compare to discounts offered to the same individuals by other leading life insurance companies?

AC: Unfortunately, reviti cannot comment on the specific pricing other insurance providers offer, since pricing really depends on a range of factors, besides and beyond an individual being a former smoker.

reviti intends to be price competitive. On average, e-cigarette users will receive a 2.5 percent discount on premiums. Those who quit tobacco and nicotine use completely will get the best discount on their premiums — 50 percent off; smokers who switch to a science-backed, smoke-free alternative will receive a 25 percent discount on their premiums. Premiums for a 20-year-old nonsmoker run from £5 ($6.47) per month for a life insurance policy that pays £150,000 ($194,125). The same premium would buy a £60,000 ($77,650) policy for a 40-year-old nonsmoker.

Traditional insurance companies set premiums based on risk profiles when a customer buys a policy, and the cost to the customer doesn’t change throughout the entire term (typically fixed on 20 years). What reviti brings to the market is different: We recognise that people’s lives change, and can change positively, over time and want to help them on this journey of positive change.

reviti will offer life insurance policies with the competitive premiums starting from £5 a month to the following groups:

  • Smokers — those who smoke cigarettes, cigars, pipe, etc.

  • Those who’ve never used tobacco or nicotine products [OR never smoked any combustible tobacco product nor used any nicotine containing products] will be offered the most financially rewarding premiums.

  • Those smokers who’ve taken steps to quit smoking and may use e-vaping or NRTs (nicotine-replacement therapies) [OR who pledge to quit combustible tobacco products and may or may not vape or use e-cigarettes and/or NRTs] will be offered a discount from reviti to pay lower premiums than for smokers.

  • Those smokers who would otherwise continue to smoke, but switched to a science-backed, smoke-free alternative (IQOS) and quit smoking cigarettes for 3 months, will get a bigger discount from reviti and save up to 25 percent off the smoker premiums.

  • Ex-smokers, who have successfully quit using tobacco and nicotine altogether, including NRTs, for 12 months, will be offered the largest discount from reviti — up to 50 percent off the smoker premiums.

All reviti policyholders will get a free access to the revitilife app — which focuses on the three key areas of food, exercise and the mind — and has 120 activities and programs designed to support positive changes in these areas in an engaging and fun way. Those who complete programs in the app will be rewarded by reviti for taking positive changes in their lives.

reviti is offering a 25% discount to those who have switched to PMI’s e-cigarette device IQOS for 3 months, and a 2.5% discount to those who have switched to e-cigarettes made by other companies. If e-cigarettes are less harmful to health than regular cigarettes, why such a comparatively small discount for using other brands’ devices?

AC: reviti offers a discount to e-cigarette users and plans to cover more smoke-free products, but each one will have to be considered on its own merits, rather than taking a category approach.

The scientific data for each product needs to be assessed, together with the potential of a product to reduce risk over the medium to long term. We have data to demonstrate that smokers who switch to IQOS are unlikely to relapse (on average, 70 to 80 percent of IQOS users have completely quit cigarettes), which makes IQOS a compelling smoke-free alternative for people who would otherwise continue smoking.

In light of Reuters' investigation on PMI from 2017, which revealed efforts to influence tobacco control policies, how does PMI plan to demonstrate the authenticity of its intentions to create a 'smoke-free future'?

Huub Savelkouls: The Reuters investigation was published in 2017, based on the leaking of documents from 2014. To be fully clear, our company’s transformation began in 2016.

Our position is clear: If you don’t smoke, don’t start; if you do smoke, quit; and if you don’t want to quit, change to a better alternative. But we cannot do this alone. A paradigm shift of this magnitude can only be achieved through collaboration. Governments, policymakers, regulators, public health experts and NGOs all have a critical role in encouraging less-harmful alternatives to smoking and shaping a regulatory environment that propels consumer switching. For that, we would support regulation that bans cigarettes in favor of allowing the sale of nicotine products that are better alternatives to continue smoking. Replacing cigarettes with better alternatives will take time, but we are fully committed to doing everything we can to ensure that this happens as soon as possible. 

We understand that skepticism will remain during our transformation towards a smoke-free future. To demonstrate the actions we are taking to transform our company, and ultimately the industry, as fast as possible, we have developed Business Transformation Metrics, reporting our progress yearly, in our Sustainability Report.

We are fully committed to doing everything we can to replace cigarettes with smoke-free alternatives as quickly as possible. As a result, today approximately 7.3 million adult smokers around the world have already stopped smoking and switched to IQOS — which is available in 44 markets in key cities or nationwide. As you may know, the WHO has ambitious targets to reduce smoking; translated to our company, they are aiming for 19 million less smokers of PMI products by 2025. We want to accelerate this trend. Our ambition is that by 2025, at least another 40 million of our smokers will have stopped smoking by switching to IQOS. If we achieve this milestone, we will be tripling the decline in smoking, compared to the WHO’s target.

PMI recently suspended a social media campaign after Reuters exposed young 'influencers' being used in the campaign, despite PMI’s policy not to feature people under the age of 25. What happened there?

HS: While no laws were broken, we fell short of the high standards we set for ourselves. It was quite demoralizing to discover, thanks to external scrutiny, that something very important to our transformation is not working as it is supposed to, due to activities that did not conform to our guidance. To complement what has been reported through the Reuters investigations, PMI can add:

  1. This discovery led our company to immediately suspend our product-related digital influencer actions to avoid the risk of similar incidents occurring in the future.

  2. In addition — on May 10, our Chief Operating Officer, Jacek Olczak, sent a letter to all markets explaining what happened and the steps we are, and will be taking, to address this issue. 

  3. Further, we have updated our guidance on standards for our Digital Influencer Global Practices for Smoke-Free Products

  4. On April 23 2019, we issued a press release, where we reaffirmed our vision for the future: To achieve a smoke-free world — that is, one without cigarettes. For the hundreds of millions of men and women globally who will otherwise continue to smoke, PMI’s goal is to switch them to nicotine-containing products that are scientifically substantiated as better choices than continuing to smoke. Our strong belief — if you don’t smoke, don’t start — begins with a continued and robust focus on preventing youth from beginning to smoke or use nicotine products. 

  5. In our 2018 Sustainability Report, we include a chapter addressing exactly this topic, and the actions we are taking to make sure this does not continue to happen. Responding to stakeholders’ concerns, we are reviewing our business activities to ensure youth are not targeted or encouraged to use any of our products — we will publicly report the results of that review by the end of 2019. This will further inform our work in responsible commercialization, which is one of the priority outcomes of our 2018 sustainability assessment.