Will you run for your Insurance?
Wearable technology makes it possible for individuals to track their health and physical activity metrics. Insurance companies have started offering data-driven health insurance plans using wearable devices to nudge their customers towards healthier lifestyles and collect vast quantities of data.
Benefits of Exercise
Exercise is a wonder drug for a broad range of medical conditions. Regular physical activity can reduce the risk of depression and anxiety. Insufficient physical activity can increase the risk of developing heart disease and type 2 diabetes. Both physical exercise and diet contribute to maintaining a healthy weight.
World health organization (WHO) recommends 150 minute of moderate-intensity physical activity per week.
You can use wearable tech to track your physical activity and health. Wearable devices record physical activity information (number of steps, swimming distance, time spent sitting), cardiovascular data (heart rate, heart rate variability, ECG), and sleep data.
Why share your data with Insurtech?
Insurance companies offer the following benefits to customers who are willing to share their fitness and activity data with them.
First, insurance companies such as Vitality lower their premiums for customers who have physical activity higher than a certain threshold and share wearable activity data with them.
Second, Vitality uses the Apple watch, loss aversion, and goal setting to help its customers develop and sustain physical activity habits. These measures translate into two extra years of life!
Third, Insurtech uses immediate rewards to motivate its customers to meet their physical activity targets. E.g., Qantas insurance members can earn points by tracking various physical activities, e.g., running, cycling, etc., on their wearable devices synced to the Qantas app. Customers can use these points for flight upgrades, shopping, etc.
Privacy, inaccuracy, and fraud
Some customers are reluctant to share their wearable data with insurance companies. People fear that insurance companies can sell their data to third parties. Another customer concern is that data from wearable devices can be inaccurate, meaning that insurance policyholders can be unfairly rewarded or penalized depending upon their wearable device. Moreover, people can abuse wearables devices and commit insurance fraud. E.g., a person can lend his Fitbit to his friend going on a hiking trip and earn reward points himself.
Wearable devices with continuous biometric authentication
To prevent this fraud, insurtech companies require wearable devices with biometric authentication to continuously check the user’s identity. Research indicates that individuals have a unique ECG (Electrocardiogram) signal. Therefore wearables with ECG sensors can perform continuous biometric authentication and prevent fraudulent usage.
Conclusion
A few insurance companies have started using wearable devices and apps to nudge their customers towards healthier lifestyles and live longer. For this insurance model to become mainstream, Insurance companies must protect customer data and not share it with third parties. Insurance companies are likely to employ wearable devices with continuous authentication and higher precision in their insurance offers to customers.