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Chi Symbol

The Chi Concept :
Precise Life Insurance Premiums
as Incentives for Environmental and Human Improvement

Using a Personal Quality of Life Index as a
Strategy for Maximizing Insurance Firm Profits

Developed several years ago (1981), the Chi concept is based on the current practices of providing different premiums for males and females, smokers and non-smokers, safe drivers vs others, etc. With computer capability, human mortality (survival) rates can be much more precisely estimated than in the past and regional statistics can be developed.. The Chi concept is simply to use computer capability to assign annually (or every two to three years) personalized chi-index rates expressive of individual change toward a desired status for a valued health factor. By encouraging a healthful environment, living in the right places (or making them "right"), and engaging in life-prolonging practices, then premiums can be adjusted. discounts provided, coverage expanded, and claims services expedited. Much of the literature providing the basis for doing this exists; a dynamically updated data system can improve the models; a competitive edge can be gained by effective use of the soon-to-be extra programming power. A role for Lasting Forests role may be in advancing knowledge of the direct, measurable relations between environmental factors (as available from a geographic information system for the corporate region) and human health and mortality.

People who operate automobiles safely receive certain considerations or rewards in their automotive insurance premiums. The Chi concept is a similar old idea, but it is more elaborate and is used for quite different reasons. It is an idea whose time has come because of:

The idea is that a personal quality-of-living index can be used as the basis for

  1. assessing premiums for life insurance,
  2. paying rebates to persons, or
  3. working with corporations that buy life insurance for their employees, giving them rebates on the basis of Chi scores obtained by each of their employees.

The primary goal is insurance firm profit (or at least no direct monetary loss). The secondary goals are:

  1. increased public relations values of implementing such a strategy,
  2. improved economics of health care for the people of the region,
  3. alternative employment options, and
  4. profound changes in the life quality of groups of people such as those in Appalachia.

I have not done analyses to test the following assumptions. I do not now have the data or the resources, but as I perceive the insurance business, the adoption of the Chi concept, stated above, could do the following:

  1. By partitioning the population of subscribers, the full costs of records maintenance, payments, and risks over time can be seen, and better managed.
  2. In tight times, marketing can be made more efficient, better targeted.
  3. Marketing can be better directed to achieve the highest returns per subscriber (rather than focusing on numbers of subscribers).
  4. Direct, but cost-effective, management of the sub-populations of people can be initiated, to secure the highest per annum premium payment to the company per dollar invested in life-extending programs.
  5. Corporate leadership and the public relations and marketing benefits from innovation and the potential direct positive personal rewards from the policy.
  6. Most corporate computers are not used at full capacity or potential. The decision power of the corporate computer complex is probably not used to its fullest (i.e., they are largely used for accounting systems). Thus a resource can be magnified at no substantial additional cost.
  7. Certain rebates and system development costs can probably be minimized through present or future tax provisions, especially as they may be viewed as university contract/grant research
  8. If the insurance-buying corporation or organization is seen as the focal point for the Chi concept, then there will be incentives to hire people with a higher quality-of-living potential (with evident spin-offs to the hiring company) and also for the company to encourage safety and health broadly (not just in-factory safety) because of the monetary benefits they receive through an improved insurance program.

Primary Consequences

The Chi concept suggests how an insurance company could offer nearly-free life insurance (e.g. $20,000) to anyone with a Chi score of 100. That is, after the full sign-up procedure, etc. a full rebate is given to these people and they have full coverage for 3 years. This is, in one sense, a "come-on" for few will receive such a score, but it is the basis of the Chi concept. People can, through working together and through personal efforts, live a more safe, rich, longer life. (The longer they live the more they pay insurance and the longer they allow the workings of the monetary system.) The expected present-discounted worth of the individual of each Chi type to the corporation increases.

Each person may elect the standard or the Chi concept insurance. No more than once a year but a least once every 3 years, those electing this type, must fill out forms and take certain tests (e.g., urine analysis). The initial forms are elaborate and includes medical history, family characteristics, and a wide variety of factors now known from prior research to relate to life expectancy. These forms are completed only once. Every re-exam, a new Chi score is obtained based on the signed questionnaire, and highly-select set of measures (e.g., weight, body volume, and automated analysis of a urine sample). A medical doctor's exam is not contemplated; a paramedical observational staff may eventually be used if the system becomes cost effective.)

The concept is rooted in general systems theory and in behavioral psychology. The dominant element is that people (populations of people; I shall not discuss the exceptional person) respond to positive rewards or reinforcement. If they knew they would be rewarded for staying at a reasonable body weight, not smoking or drinking excessively, consuming only reasonable levels of sugars and salts, and living in a safe, healthy home, there is a reason and reward for doing so. The corporation, of course, is interested in its own well-being and that of its subscribers for ethical and moral reasons. However it has secondary reasons for engaging the Chi concept because happy, health people live longer and pay consistently more premiums with substantially more returns due to the premium-time-interest interaction.

The Chi concept depends on a Chi score. This must be computer-produced. It is based on inputs to a computer, entered by a variety of sophisticated technology that is improved almost daily. I shall not digress on such technology here. It is grounded in rewards for making desired change (from entrance characteristics) in each of a set of about 20 weighted categories of physiological performance and condition. Assume it is entered from a form, at least at a computer terminal. This file is merged with a computer tape from a laboratory, e.g. the automated analyses of blood, urine, and saliva. These data are merged with local data (e.g., about health-care delivery systems, pollution, tornado and seismic risks). A unique computer model for the corporation would exist, one that is dynamically evolving, that would create an image of or a model of the person being insured. If that person is the most healthy imaginable, comes from a healthy family, lives in a safe and unpolluted environment, has reasonable low-risk life activities, and has a reasonable personality profile based on an administered questionnaire, then his/her Chi score is printed out as 100, and a full rebate is given. The corporate public relations staff would probably create a local "ceremony" to award the person this quality-of-living award and insurance reward.

A person receiving a score of say 93.6 would get a major rebate and a computer-generated statement with abundant congratulations with

The suggestions would be listed in order of their importance (i.e., what to work on first or with the most effort.) For example, a personalized report might say "If you lose 22.4 pounds, your X score will improve 2.1 points."

Similar models which have been created within our program here cost less than $0.50 to run. Total printing, reporting, mailing costs may bring the reports to about $5-lO. I believe these can be borne by the subscriber. The higher the cost, the longer the intervals between evaluations are likely to be. This may defeat some of the Chi concept benefits--i.e. having a person actively involved with and interested in having a personalized monitoring system for their lives, one in which they can see progress (a computer graph of all past scores could be an option in the report) and experience the personal financial rewards of "getting better." Similarly, the bad news of a regression does not cause a customer to abandon the company. Carefully worded computer aids from the skillful corporate staff could offer advice at toll-free numbers, offer ancillary reports, and in general provide encouraging guides to subsequent years of the most high-quality life possible.

Within the above concept is embodied:

  1. Average recommendations are wrong, most of the time, and for most people. People are unique; they can be treated as if they were with computer aids.
  2. Large complex systems like human life can be simulated and modeled and such models used for very practical, profitable ends.
  3. The concept is not an all-or-nothing. It may be a corporate option, a means of diversifying.
  4. The concept is not forced on people. It is an option which they may elect.
  5. The system does not make anyone do anything. It is not big brother; it is a personal advisor and aid. It synthesizes into a complex model all that we know about physical and mental health, environmental factors, the work environment, safety, age, weight, major genetic factors---an unending list, stopped at reasonable levels by corporate decision.
  6. Inherited traits viewed as unhealthy are not penalized; births of healthy children are rewarded.
  7. The system developed could become another corporate enterprise, serving the life insurance component of the corporation, but continuing to expand to serve -- at a profit -- health, hospital, religious, welfare, foundations, urban planning, military, intelligence community, and other segments of society. Certain individuals and medical doctors would seek regular, full-scale reports from the x system on themselves or their patients.
  8. Whole systems; those that "get it all together"; those that integrate many factors and synthesize, distil, and subtract the noise; those that are decision-oriented, applied, and that tie economics to ecology and physiology are in short su~ply. The need exists and the methods are now available ... at least to begin.

Secondary Consequences

The secondary consequences of the Chi concept, related to or parallel to the above, are equally exciting. A brief digression is needed to make reasonable the rationale for these consequences. In southwestern Virginia are the seven major coal counties. In one of these, Wise, the infant mortality rate is 58 per 1000. In Charlottesville, Virginia, . the rate is 8 per 1000. In Roanoke the rate is 14 per 1000. These are recent statistics and I have not done statistical analyses on statistical health data since 1974. The point of these observations is that there are significantly different mortality rates and life expectancies throughout Virginia and the U.S. There are lots of reasons. Usually the answer is: "there is a complex set of reasons." developed a plan for 68,000 acres in Wise County. The plan acknowledges that most of the coal will be gone by 1995, that the county is, true to tradition, heading for a bust from a recent boom, and that "as the county goes, so goes the corporation lands (the 68,000 acres)." I argue that as the land is developed, so will go the county, eve'.n after coal. I also argue that people in a "bust county" are not good insurance customers ... or risks.

Another facet of this convoluted thing is that the environment influences health and life expectancy. There are areas in Virginia with primary sewage treatment only. Children swim in polluted rivers. There are thousands of people on unstable, contaminated wells. There are some who live in airport noise zones (proven to relate to heart disease); there are some who live in the plume path of a factory, a plume that is present with every inversion. Some eat from home gardens near coal-using plants that have a "mercury shadow" around them. Miners elect to work under-ground without respirators.

The secondary consequence of the Chi concept, perhaps sufficient unto itself, is that it provides a means, through the private market sector, for people to see and voluntarily take action either to move or to cause changes that are beneficial to their health and life expectancy. It makes sense that we all want good health but without direct, conspicuous, personal reinforcement, as from the Chi concept rebates and discounts, no change will occur.

My perception is of a person who gets a Chi score on 32.1 consistently (and pays accordingly). He works with Bill who is no more healthy appearing and who gets a score of 69.2 and pays half the insurance rate (gets twice the rebate). That person's report with his score will indicate a reduction of 19.4 points, for example, because he lives where there is only primary water treatment with a 5% failure rate. He's voted down a new water treatment plant for 15 years. Sooner or later, through the message of money, the area will become uninhabitable, few will afford insurance (and no company would take much pleasure in the risks incurred), or else they will put pressures on, wherever needed, to see their water system is improved. The difference is fairly conspicuous between present policy and the future as led by the Chi concept. Informed people vote for things in their best interest. Now there is so little information, so few or inconspicuous rewards, that it seems rational to vote-down a water system bond. With the Chi concept, the rewards would be conspicuous; no one would tell anyone to build. Eventually it would be clearly in their best interest to build (or solve the problem creatively).

Colors are coded to show the convergence of combinations of nine different factors as they may affect human health or environmental conditions.
The drinking water problem is used as an example. We have statewide data that allow us to map factors on a county level. Here a 9-factor map for a part of a county is shown. We can produce a GIS map of temperatures (one such factor) for every 30 x 30-meter square area in Virginia and Tennessee. These and similar data can be used and maps created for probability of winter highway accidents, occurrence of diseases, proximity to health-care, pollution zones and hundreds of life-quality-related factors. A person's application need only specify home and work sites and hundreds of factors can be brought to the analysis of average life expectancy of people (otherwise statistically controlled) living on similar sites.

The hypothesis within the Chi concept is that when the people of a county see that they are low in some life-quality supporting factor they will address that factor. Perhaps there is nothing that can be done (e.g. uranium tailings over hundreds of square miles that relate well to leukemia rates). Then the choices are;

  1. to move,
  2. stay and pay, or
  3. find a solution.

The latter provides much of the excitement of the concept for it allows and encourages innovative solutions to a problem and when perfected, the scores for everyone in the community are improved. This direct, personal feedback may be skillfully coupled with group rewards and group celebrations such as ribbon-cutting ceremonies.

An example is not too far-fetched: "We developed a new housing ordinance that allowed waste separation and we built 10 waste disposal facilities, and we use the processed waste from them on a town park and Christmas tree farm (with the partial return of profits). We have solved the sewage problem in our town!" It could be a bio day for the town; the very same day on which the people there receive rebates from the insurance corporation.

The secondary consequences are related to:

  1. Voluntary efforts
  2. The free market working
  3. Private sector influence over the public good
  4. Personal, family, as well as community group rewards
  5. Interactive group rewards, i.e., all of the synergistic effects relating to health and nutrition, to nutrition and education, to education and economic well-being, to economic well-being and medical care and health, and all of these to safe, moderately unstressed, disease and trauma-free lives. The role of the environment best seen, measured over the long run, and expressed in human health, and that nebulous concept articulated in the calculated life expectancy of a subgroup.

Life insurance thus may be viewed as a major means of long-term environmental management. Sales and execution of the new type of life insurance would feature:

  1. Chi scores
  2. Personalized service
  3. Rebates
  4. Group programs (unions, companies, and organizations)
  5. Adjustments for dynamic personal change in a highly mobile society
  6. Profits equal to or greater than current programs
  7. Relation to a very large environmentally-oriented segment of society (400,000 in the Audubon Society alone)
  8. Locally different premiums (via rebates) within a single-rate national policy
  9. Potentials for additional relations and parallel development in insurance programs such as car, theft, fire, hospitalization, and arson
  10. Potentials for expansion of the basic computer system into a major corporate enterprise
  11. Enlightened self-interest as a fundamental dimension to total environmental management.

The Next Steps

People these days often ask about the bottom line. I assume this usually means the total cost of a project. In this instance, as far as this document or the idea goes, my personal payoff will be to learn it will be implemented. I would take great pleasure if the corporation found the concept useful and said so one of these days. There are other options:

The author is Robert H. Giles, Jr., Emeritus Professor, College of Natural Resources, Virginia Polytechnic Institute and State University, Blacksburg, Virginia 24061, USA. Dr. Giles taught systems ecology and with students created a large cellular data base, a geographic information system for the state of Virginia. He once taught Man and Environment in the Division of Environmental and Urban System and has been chairman of a planning commission. This document was prepared in September, 1981, but was rejected by an insurance company.

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Last revision June 30, 2003.