Wearables and Insurance
As wearables (being the part of the Internet of Things) are coming into practically every area of our life, it is quite natural, that Insurance industry is actively exploiting all benefits that they provide. In this short pots we will look at some developments – market predictions, as well as some existing applications.
Biometric information derived from wearable devices is a natural base for development of customized health insurance premiums. Indeed, wearables, as well as connected homes, cars, Internet of Things, smartphone applications are providing new sources of data to complement traditional underwriting data. Generally speaking, this will leads to variable premiums over the policy term to incentivize better behavior.
An interesting note can be found at Usage Based Health Insurance web-site:
"The revolution in wearable fitness monitoring devices and smartphone apps that track steps and check-ins at the health club is a boon for the insurer. Selecting a healthier breed of customer drives down the risk portfolio and improves profitability, especially in an age where the amount of profit on coverage is essentially capped, so therefore you need to make sure that all your coverage categories are on the plus side."
So, we are witnessing that certain health insurance companies are successfully implementing wearables:
- In 2015, Oscar - a US based health insurance company in partnership with Misfit, provided its members with free wearable fitness trackers. Users receive up to a total of $240 annually each time they reach their daily goal.
- United Healthcare, another insurance company offers an app for health management that can be synced with Fitbit devices.
Market research shows good prospects. Here are some of the reports:
Top 10 Trends in Insurance in 2016. What You Need to Know by Capgemini
Trend 01: Increased use of Internet of Things by Insurers
• Using IoT, insurers can closely analyze customers’ data and identify their needs and risks
• Customers’ health risks can be determined more accurately using wearables
• Policyholder service will transform from being a customer-initiated activity to insurer-initiated activity
• IoT can help in reducing the turn-around time for initiation of claims by tracing the exact location and circumstances responsible for the claim
• IoT sensors can be used as warning systems, which can reduce the frequency and severity of claims
Trend 09: Usage of mHealth Apps by Insurers
• For insurers, mHealth will be of great use, as a patient’s risk profile can be judged easily at an earlier stage:
-- If consumers are healthy, the claims from them will be greatly reduced
-- If spreading of diseases is monitored and controlled, insurance companies will be directly benefited due to reduction in claims
• mHealth can also reduce administrative costs of health insurers to a great extent:
As they have all the data about their customers with them, pulling data during policy renewals or new policy acquisitions is easier
• The companies can cross-sell specific insurance policies to their customers based on their health data
Download the full report HERE
“Accenture Technology Vision for Insurance 2015—Digital Insurance Era: Stretch Your Boundaries,” highlights emerging developments in IT that will have a great impact on the insurance industry in the next three to five years.
"Becoming a digital insurer is no longer simply about incorporating digital technologies into an organization. It’s about using them to create a broader fabric that connects customers, partners, employees, and industries, and enables new insurance value propositions that expand value creation and growth."
- Here are some findings:
- Providing personalized customer experiences is a top-three priority for 73% of insurers.
- 77% of insurers agree: Companies will move toward real-time platforms and systems as they adopt mobility and Internet of Things solutions
- 56% of insurers say managing data is “extremely” or “very” challenging, considering changes in its volume, variety and velocity.
- 76% of insurers believe that successful businesses will soon manage employees alongside intelligent machines—ensuring collaboration between the two.
Also, a good reports was produced by EY: Usage Based Insurance. The New Normal? July 2015
This infographics from Sapiens The Wonderful World of Wearables for Insurers shows some of the benefits for insurers:
The full infographics can be viewed HERE
However, Sapience in their Blog warn:
Before reaping the benefits from wearables, insurers will have to carefully consider their strategies and take a few necessary steps:
• Complete their digital transformation – using wearables to enhance and personalize the customer experience will be virtually impossible for an insurer lacking full digitalization capabilities.
• Formulate a digital strategy– insurers require a comprehensive strategy that maximizes today’s digital and Internet of Things (IoT) capabilities to improve the customer experience.
• Be open – it’s unclear who will emerge as the wearable technology industry leader, so open integration is crucial.
• Effectively manage data – mountains of new data will not be helpful if insurers are unable to effectively sort through it, find the valuable information and quickly apply it.
• Secure data – some insurance customers will be nervous about their personal health information falling into the wrong hands. Increased security investments will likely be necessary.
Read the full story How Insurers Can Maximize the Wearables Opportunity HERE
The Case for Connected Wearables in Life Insurance
Source: Asia Insurance Review | Jan 2015
So why are Wearables a good thing for Insurance?
The rise of wearable fitness trackers as part of corporate wellness programmes has been an emerging trend over the last 10 years. In the past, enlightened companies were giving out Fitbits to help employees track their own fitness.
More recently, companies have been trading programme participation and fitness data captured from such programmes for discounts on their corporate health insurance. For example, Appirio, a San Francisco-based cloud computing consultancy, was able to get a 5% discount ($300,000) off their insurance bill in 2014, while BP America distributed around 16,000 Fitbits to employees as part of an integrated wellness programme and claim to have put a brake on corporate healthcare cost increases by slowing them to below the US National growth rate in 2013.
A key ingredient to the success of these programmes is the engagement of the members, so that healthy behaviours are encouraged and rewarded.
A perfect storm for wearables
In summary, several intersecting trends have conspired to make this the perfect time to consider the launch of Insurance programmes and products powered by the new insights from the data being made available through wearable fitness and health trackers:
• The whole fitness and healthy lifestyle perspective has entered into the mainstream culture;
• Devices like the Apple Watch have become fashionable, objects of desire;
• The data from these devices is easy to capture and share – no forms to fill in;
• The data is of clinical quality, in at least some cases, and therefore useful for actuarial models;
• Insurers have already started to jump on the idea of “Telematics” for humans for risk pricing; and
• Feedback from this data is able to positively modify behaviour to reduce health risks and improve the quality of life for those participating.
How Wearable Devices Could Disrupt the Insurance Industry
By Denise Johnson | May 6, 2015
A survey conducted in 2014 by Strategy Meets Action (SMA), a Boston-based research advisory firm for the insurance industry, found that about three percent of insurers are already using wearable devices and another three percent are experimenting with the new technology, while 22 percent are in the process of developing a strategy for using them.
A new survey of insurer executives in nine countries by Accenture found that 63 percent of insurer executives believe that wearable technologies will be adopted broadly by the insurance industry within the next two years, while nearly one-third (31 percent) said they are already using wearables to engage customers, employees or partners.
Within insurance, there are various areas of potential use for wearable devices including marketing, underwriting, risk management, new product development, workers’ compensation and personal auto injury claims management.
Here are some interesting programs and applications that are already existing in the market:
The FitSense data model makes it possible to integrate Wearables data from different manufacturers with traditional enterprise data into a coherent whole that helps to derive actionable insight where there was peviously just data. Proprietary algorithm normalizes data across wide range of activity tracking devices to provide single-comparable risk factor.
Activity Score developed in collaboration with researchers from National University of Singapore (NUS) School of Public Health.
Develops flexible insurance products and cross-selling solutions for your digital business, connects insurance carriers at the point of sale and provides insurance cover as a secondary purchase.
The Swiss ‘mobile-first’ digital insurance broker. Insurance brokerage and policy management process is done on mobile phone via iOs/Android application. Includes overview of existing insurance policies, tariffs and services, automatic analysis of insurance coverage, provision of recommendations on how to improve individual insurance protection.
The world’s first Peer to Peer insurance carrier. Small groups of policyholders pay premiums into a claims pool. If there's money left in the pool at the end of the policy period, members get a refund.
Image by MedGizmo