It has been some time since wearable devices and their connected apps stopped being viewed as simply a fashion fad and a healthcare tool, and became a much bigger springboard for business. Every wearable is a way of capturing masses of hyper-personalised data that is tremendously useful for the healthcare industry – which is evolving at great speed thanks to them – and especially for insurers, who have never had such a big opportunity to predict the risk of policyholders. However, for this to work, people who have insurance must be willing to share the private information that their wearables record.
Wearables are devices whose technology monitors, stores and categorises records of the wearer’s physical activity and heart rate, as well as certain life habits that are to a greater or lesser extent related to health, such as daily calorie intake. The most popular ones are physical activity bracelets.
The KPMG consulting firm report Insurtech 10: Trends for 2019 states that wearable technology is one of the most influential factors this year in the insurance sector. “Health is one of the few natural ecosystems in which insurers have a source of growth”, they argue. For this reason, companies that fail to incorporate the management of such personal information into the marketing of their products, or that take a long time to do so, “will seriously compromise their future”. The conclusions particularly warn that “without access to these data packets, insurers will not be able to manage risk or interact with their customers.”
In the same report, KPMG anticipates the next step in the exploitation of these personal data about people’s physical condition. As they are used more widely, as insured people agree to share their information and as insurers normalise the management of it, “it is expected that there will be a greater use of genomic technology and epigenetics to determine the biological age of a customer,” which “will probably radically alter the criteria for fixing the price of life insurance”. What that means is that it will not only be whether you smoke or have ancestors who had cancer that will increase policy costs. If a person’s heart shows no signs of arrhythmia, its owner can obtain premiums cheaper than another person who does.
Despite such clear forecasts, the exploitation of wearables by insurers is progressing more slowly than expected. Firstly, we must find the optimal technological solutions for it. Here we can highlight the crucial role of insurtech firms as providers not just of technology, but also of ideas for insurers. At insur_space by MAPFRE we are both witnesses to and protagonists of this phenomenon. In addition, the MAPFRE Foundation chose as one of their finalists for the Social Innovation Awards a Spanish startup that has developed a wearable bracelet able to detect cardiac arrhythmias.
We also have to work on gaining people’s trust and on building a sound commercial strategy: defining an optimal formula to attract insured people who will voluntarily agree to share their personal health and physical activity data. There are already some examples, such as the insurer John Hancock, which a year ago launched “the life insurance policy that gives you money back”, depending on whether the customer improves their physical activity records with their connected wearables. There’s also UnitedHealthcare, who even gave away an Apple Watch to its customers if they met a series of daily physical activity goals.
Wearables are here to stay, and will flip the traditional business of insurers on its head, moving from a reactive model – the payment of compensation – to a proactive model as a provider of protection, and even health and well-being.