Wearables and the Insurance Industry
Quadrant Quick Take: the combination of real-time personal metrics and big data analysis could mean a new day for insurers.
Individual physical fitness sensors like the Fitbit allow consumers to monitor their heart rate and respiration, blood pressure, the number of steps they take in a day, and other indicators of vitality. To employers and health insurers, this means a good way of encouraging people to adopt healthier habits. It could provide insurers with the data needed not only to analyze the health of the insured, but to use predictive analytics to project future potential health problems.
Despite the benefits, wearable technology, especially when it passes on data to a third party like an employer or an insurance company, can seem intrusive. One way to mitigate the intrusiveness is by offering people money in the form of reduced premiums as they become healthier.
A similar idea is taking root in auto insurance. Car insurers like Progressive and Metromile are offering potential discounts to drivers who will plug a monitoring device into their car’s computer system and allow it to monitor data points such as speed, tendency to brake suddenly, rate of acceleration, number of miles traveled, and others.
All this is a radical departure from past industry practice, and as with any new development, there are issues to be resolved. As noted, one of the main issues, particularly as regards health insurance and wearables, is privacy. Here are some questions that remain to be answered:
●How much access do we want our employers to have to our medical data?
●How much access to our daily activities do we want our employers and insurers to have?
●Just how securely will this data be stored?
●Do we want it secured on a device that might be seized for legal examination?
The key for insurers—and, in the case of health insurance, employers—will be to keep participation in these programs attractive and optional. If handled correctly, this sensor/data combination can be transformative for the insurance industry in the way ecommerce has been for retail. And it can be as easy to implement: after all, nobody has to force consumers to give Amazon their credit card numbers or let it keep track of what they read, eat, and wear. They do it because there’s something in it for them.
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