Jan 09, 2018

Wearables are eager to talk; are insurers really listening?

By Team Intellect SEEC

As a term, wearable technology indicates microcomputers that can be comfortably carried as a part of our clothing or as an accessory. Did you know wearable tech was used as early as the 17th century? Developed in China, Abacus Rings allowed wearers to accomplish complex mathematical tasks.

Today, Apple smartwatches are being flaunted as a style statement, but in fact, they are defining the way we interact with ourselves and the world around us.

Corporates in the health, fitness and insurance industry are waking up to the massive potential of wearable tech and its positive impact on life and general insurance premium.

A real game-changer for insurance

Insurance companies such as AXA, Esurance, Phoenix and John Hancock have introduced wearable technology for their customers. The tribe sure is growing. In this light, we examine how wearables are impacting insurance.

Prevention over reaction

A good number of diseases of the modern world—diabetes, hypertension, sleep apnea, etc. are associated with well, the modern lifestyle. These can be managed or prevented altogether with appropriate diet and exercise. Over the last couple of years, consumers have become savvy of measuring different aspects of their lifestyles including food intake, workout regimen and sleep quality to be able to make suitable modifications.

Few insurers are experimenting on the fringe to adopt consumer-generated wearables data by incentivizing insureds who are making changes in their physical activity and nutrition levels, thereby improving their own health. A celebratory trend, no doubt. However, it needs a greater push, so that wearables data becomes as mainstream if not more as data from upfront forms and cursory blood-urine tests.

Upfront vs. Continuous learning

Presently, a majority of the data insurers collect from their customers is through static forms prior to issuing the policies. Either these forms are still paper-based, or are digitized ‘as-is’ with no intelligence built into them in. They are every bit as tedious and user unfriendly as their paper equivalents.

The other significant learning about the customers is through perfunctory blood-urine tests, the results of which are indeterminate as there are too many handlers between the collection of samples and the final analysis. Plus, some of the advanced tests required in certain cases can be invasive.

This is no endorsement to replace existing methods of collecting data with wearables altogether (there is a lacking as of now in terms of data validity). However, wearables combined with direct-to-consumer genetic tests will give rise to a robust data framework in the near future. When insurers start using wearables data, not only do they get a head start in using a dynamic form of data, but they also get more opportunities to learn about their insureds throughout the policy lifecycle. Carriers can dynamically adjust premium as per the real-time picture of an individual’s health.

Corporates to go all in

An all-around healthy employee is a happy employee and corporates know this. What with an increasing number of them taking workplace satisfaction surveys seriously?

But here’s the surprise. Insurers, not employers are better placed to enable wellness initiatives. Imagine a wellness program driven by an insurer at the behest of a corporate. The insurance company can start the employees off with a non-invasive annual health test and a wearable device to monitor progress on test results in real-time. The non-invasive health tests can even be a pro-active test like higi—simple and accessible where users’ vital signs are captured on their own initiative and can even be shared on social media.

Wellness presents an opportunity like never before for insurers to build their brand loyalty in a market that is highly commoditized and fragmented. It also allows for products to be bundled together. For example, offering customers a hybrid option of life and health insurance policy.

How trustworthy is wearables data?

Even as wearables track gym attendance and workout routines, there are always the odd customers who game the system. For these cases, appropriate measures need to be put in place. For example, in addition to tracking wearables data, customers can be incentivized with grocery coupons and the supermarket data can be tracked in correlation with gym attendance data. The degree of accuracy increases when private data from wearable apps and devices is intersected with data such as weather data, geographic data, data from social media, etc.

The triangulation of the different data sets will not only help curb instances of fraud, but also help determine the rewards and benefits a deserving customer has to get.

Ensuring data privacy

When it comes to confidential health data, privacy needs to be completely accounted for. Insurance companies need to be transparent in their data management practices. They need to assure customers that unauthorized disclosures about their lives will not be made. There has to be a clear procedure to opt out of the program if a customer feels uncomfortable in it.

Then, of course, insurers need to ensure compliance with Health Insurance Portability and Accountability Act (HIPAA) in the US. We have to bear in mind that HIPAA regulates certain types of organizations that hold the data, not the ‘data’ itself. The act does not apply to life insurers as they are not covered entities.

It’s a data game, now make your move

It’s increasingly difficult for the laggard insurance systems to adapt to this exponential tech landscape as compared to new-age startups that are more nimble and cost-effective. Asking the right questions right now can help one tide over this dynamic tech shift.

Your action plan

• Create a holistic data strategy.
• In tandem with hiring data scientists, invest in a solid data aggregation platform.
• Make sure that the platform is scalable to accommodate not just today’s data sources but future sources as well.
• By 2020, you will have 44ZB of data at your disposal, so it’s imperative to deploy AI to scan such massive amounts of data, match, validate and flag risks within seconds.
• Rather than investing in a four-year plan of implementing a core system that is already outdated when fully implemented, moving to a cloud-native system will save valuable time, money and energy. In addition to 99.99% availability and speeding up time to market by tenfold, companies have reduced their IT costs by 60% and reduced IT management time by 85%.

The wearables are ready to talk, make sure you’ve got the right strategy to listen in and action on all that chatter.