The future has arrived: Wearable technology and health insurance
The future has arrived. Depending on your age, you may take for granted all the advances we have seen in the last 10 years. I am a big fan of fitness trackers and wear them regularly.
I compete against myself to continue to improve fitness and over improved health.
Wearable Technology
Technology and wearable devices have grown in demand and use over the last few years. By “Wearable technology” I am speaking about electronic devices that are worn on the body or clothing. These devices can even be part of clothing.
These devices are capable of collecting a variety of data including video and audio on the driving, eating, exercise and other habits and behavior of those wearing them and then communicating this data over computers or smartphones to third parties such as insurance companies.
Brands
Whether you are thinking about the Apple Watch, Fitbit, or Jawbone it doesn’t matter. These new technologies will provide much greater information to individuals and insurers about the activity levels of the individual. The information that the device can report back to the wearer is amazing.
Personally my behavior is impacted by Myfitnesspal.com and Jawbone on a regular basis.
Health Insurance
As a consumer of health insurance, even if you are on a company health care plan, your are better off buying one of these devices to track your data.
The technology companies, recognizing the privacy concerns, have agreed that the customers will own all data and have control of authorizing the use of the data. This is an important issue as it allows the customers who have the devices with positive outcomes/data to use for their benefit when purchasing insurance, and those without devices or positive data to refuse to share with health insurers.
Future of Insurance
In the next 2 to 3 years, I anticipate insurers taking a conservative approach with those who don’t have full data to share at the point of underwriting, and the credits/benefits of sharing this data will encourage most consumers to buy. See my article about leveraging your data for insurance purchases.
According to Timetric, ” insurers can use this information to set targets and incentives for policyholders to live a healthier lifestyle, encouraging them with the possibility of lower premiums. As an example, John Hancock, an American based life insurer, have released an Apple Watch app where customers can record their activities and earn up to a 15% discount on their annual premium.”
Insurers
If you are an insurer, you need to adapt to this new data source and embrace the change. Insurers need to be more engaging with the consumer than on an annual basis.
As the health insurance savings is one piece of the puzzle but personalize health advice will be another. Its a great way for insurers to stay in front of customers.
There are various potential uses for underwriters, marketing, in new product development, workers compensation, etc.
By adopting wearable technology insurers are likely to reduce the size of their claims in the future as they will be able to measure risks more accurately and reduce the occurrence of serious health incidents.
According to the Insurance Journal, “wearable technology a game changer for the insurance industry with the benefits of using wearable devices appearing in the areas of risk management and return-to-work.” According to a PwC report, The Wearable Future, 20% of millennials already have a Wearable device. This is the group that is leading this consumer market, with more than 50 percent estimated to purchase fitness bands next year. Millennials are looking for devices to tell them their exercise efficiency (81 percent of people), their dietary and medical info (71 percent), and deals on retail purchases (51 percent).
Investors
As an investor in insurance companies, this technology has time to advance and be implemented I anticipate it will likely help health insurers to measure risks more accurately, which will have positive implications for the profitability and efficiency of health insurance companies.
As mentioned in the article on Navigating the Future of Insurance and Reinsurance, these skills are required for the future and to remain the top tier insurers. Examples of some of the Health insurers positioned to benefit include Cigna (CI), United Health (UNH, Aetna (AET), Anthem (ANTM), Humana (HUM), etc.
Thoughts
Overall, health insurers are well positioned to take advantage of the potentially large benefits from the increasing use of wearable technology among their customers. Particularly, if they will offer discounts on premiums, regularly engage their policyholders and be able to earn the trust of policyholders with regards to their data.
Consumers will benefit by collecting their data and utilizing the information of wearable devices to actually improve their health (live longer).
