Insurers Get the Measure of Wearable Tech
Ever considered wearing clothing that monitors your heart rate and helps reduce stress? It’s not so far-fetched - something similar is already patented. Along with telematics, “wearables” like this belong to the fast-expanding group of Internet-connected tools known collectively as Usage Based Devices (USB).
Wearables can also involve micro-sensors embedded in textiles, applied to the skin or integrated into consumer electronics that can be worn or carried as an accessory. Already, the data generated from USB tech is reshaping how some insurance is transacted.
Many of the current applications for wearable technology are in health monitoring, mobile treatment and practical nursing. Sensors attached to the body or inside garments make it possible to track patients remotely and over extended periods of time, which is important for physical medicine and rehabilitation.
Smart contact lenses exist that can measure glucose levels in diabetic tears or track ocular pressure in glaucoma. Ultra-thin, flexible polymer skin patches can monitor muscle movement and use stored data patterns to deliver controlled doses of medicine through the skin and track the therapeutic response. A body patch can control an ingestible sensor embedded inside medication to improve compliance with treatment.
It follows that insurers need to take notice of what’s happening in USB and wearable technology because it could soon influence underwriting and pricing.
In fact the technology has already entered the life and health insurance space. Some providers already offer wearable fitness devices to policyholders for recording their physical activity. The idea is to promote fitness and wellness as an integral part of coverage, giving policyholders rewards in return for complying with set health goals.
The programmes use data gleaned from wearable fitness devices - counted steps, burned calories and attained heart rates, for example. The technology is attractive because the data it provides may be more verifiable than, say, optional visits to the gym. Regular physical activity not only promotes psychological well-being but reduces the risk of developing diabetes and hypertension or dying from cancer or heart disease.
Future applications could extend to monitoring breathing, heart rate and sleep, tracking hydration levels and calorie intake, recording movement, controlling therapy and pain management, and programming exercise. That might mean continuous monitoring of physiological cues associated with illness.
More and more people will take personal control of their health and fitness and use devices to generate, store and share the results. And it isn’t such a giant leap to imagine carriers using discrete devices to access policyholders’ biometric information with their permission.
Wearable technology could add to the increasingly important role played by big data in a life insurance context, collating health metrics for life portfolios, for example, just as "black box" telematics is doing in motor insurance.
It is not clear how far consumers will be persuaded to share data in return for, say, a lower premium. USB usage opens concerns over data privacy and even cyber-crime. But people are increasingly open to new technology and when it’s combined with smartphone apps, the widespread adoption of USB to monitor lifestyle may be just a few steps away.
Today, most consumer wearable technology is fitness-related gadgetry that may only appeal to a subset of the insurable population. To be universally adopted, USB tech must become low-profile and function in the background and concerns over data privacy must be allayed. To change insurance distribution, it must be harnessed to digital - read mobile - solutions.
The consumer wearables currently available do not yet offer the life industry an alternative to its traditional, analogue risk selection tools. It is not clear if simple monitoring devices can help life and health insurers minimise risk but there is evidence that exercise is beneficial to health. To revolutionise underwriting, the outputs that wearables give must correlate with the traditional selection criteria that they may surrogate. Work to understand this correlation must start now while the USB market is in its infancy.
Read my article for more on the possibilities wearable technology presents life and health insurers.