Wearable devices are everywhere; from the premium Apple, Garmin and Fitbit brands, to the free smart phones apps and entry level step counters that lined many a stocking at Christmas. Creating a healthy rivalry in households across the country, people are now tracking their daily step totals and paying more attention to keeping active. Gartner predict that 322 million wearable devices will be sold in 2017 alone. A staggering number of people are already recording their own health statistics, from heart rates to sleeping habits, and the insurance industry wants the opportunity to tap into this data – offering a more personalised insurance based on the individual habits and needs of the policyholder.
Alphabet (Google’s parent company) have signed up 10,000 volunteers to wear a Verily health tracker (Study Watch) and have their health data tracked and analysed. It is the beginning of a four-year study called Project Baseline to find out why people transition from being generally healthy to getting sick. The goal for the study, said Verily’s chief medical officer Jessica Mega, is to “create a map of human health”. Google’s previous attempt to enter the insurance industry ultimately backfired in the fiercely competitive UK Price Comparison Website market. This latest attempt is a longer term strategy, with Pharma companies also working with Alphabet on a variety of life sciences initiatives.
Reluctant customers
In the world of corporate data breaches and cyber-attacks, it’s no surprise that people are reluctant to give organisations access to their personal data. There needs to be a guarantee that this data is safe, protected and won’t be sold onto other providers for marketing purposes. The fallout following the recent NHS cyber-attack demonstrated the understandable public outrage that emerges when personal data is exposed – something insurance companies are wary of when storing medical data. Perhaps surprisingly, recent Altus research showed that insurance companies actually fared better than technology companies when it comes to who are most trusted.
Coupled with the data breach concern, there is also the worry that premiums could go up unexpectedly. Perhaps you’ve had a stressful few weeks at work; your cholesterol levels are up, you’re not sleeping as well and you’ve not had a chance to pop to the gym recently? What does this mean for how much you have to pay, for now and the rest of the year?
Benefits of wearables for the policyholder
Structured health insurance products that provide a heavily discounted wearable device alongside the insurance policy, are on the rise. In exchange for consumer data and an exercise plan that ensures customers are staying fit and healthy, insurance companies will keep premiums low – much in the way that a driver with no-claims will hopefully see a lower renewal premium. With wearables, you can tailor your insurance so that it is suited to your individual health needs, meaning you’re not paying out to protect yourself against things that are unlikely to affect you.
Ultimately, using wearables means there will be fewer claims overall – which is a great business model for all parties. This new technology could help medical insurance act as a risk prevention – instead of merely a risk resolution.
What next?
Customer engagement and a willingness to share data are necessary before wearables really take off in the insurance industry. Dangling a carrot of free technology is a way to engage customers but protection is vital should wearable technology be compromised. This data isn’t simply name, address and payment details, it is potentially highly personal data about an individuals’ wellbeing. The insurance industry will need to develop solutions that help protect the policyholder and reassure the individual that their data is secure. With GDPR now less than a year away, insurers are already spending considerable time and investment in ensuring data is well protected.
The ubiquitous nature of wearables has helped increase engagement with insurance and customers have been introduced to the numerous health benefits of using these devices. If you’ve already got a device tracking your wellbeing, why would you not want a doctor also doing the same? By becoming an extension to the wearable itself, wearable insurance is likely to be generally accepted by customers.
This article first appeared in Information Age June 2017
