Some thoughts on insurance companies and the use of wearable technology

When it comes to insurance and wearables, I think the effect of these devices will be limited. I think this because:

  1. I don’t believe people are consistent about using wearables. I have been using wearables and fitbits for some time. I believe most people are prone to not wearing them constantly. Inconsistent use will make it harder for insurers to guarantee you a  better rate or for you to achieve one.
  2. You are more likely to wear it and use it when you are trying to keep in shape. If you are not, you will likely not wear it. The insurer can’t know if you are getting out of shape or just no longer wearing it. (I used to use a Nike+ device for running, and I ran consistently, but I did not use the device consistently. Many days and weeks I just didn’t feel like it.) The use of wearables is mostly an upside for you, and of limited value to the insurer.
  3. One reason I gave up on using wearables consistently is that they don’t give you much new information. I walk and exercise consistently and so they often give me the same information consistently. Which means I tend to not wear them often. I don’t need the fitbit to tell me I walked 10,000 steps. I know I did because my commute to and from work plus my lunchtime walk consistently gives me that.
  4. My fitbit scale is great for tracking my weight over time, but an insurer could also just ask me my weight, height and waistline and get a sense of my eligibility for insurance, just like how they ask if I smoke. A very low tech way to measure things. Men with a waist over 40 inches are more prone to heart disease then men with much smaller waists, regardless of what a high tech scale says. A insurer needs a limited number of data points to assess your health risks.
  5. I believe there is limited return for insurers to get this much data. I base this on my current life insurer. I can get life insurance from 1-6X my salary (assuming I pay the corresponding rise in premiums) without providing medical data. They only ask for medical data if I ask for more than 6X. It likely isn’t of benefit for them to process the data for lower amounts, so they proceed without it.
  6. Insurers are data driven, for sure, but I think they are good at picking out a limited number of good numbers to determine what to charge you for insurance. I don’t think the numbers coming back from wearable tech is all that good.

So in short, I don’t believe people or insurers will get much benefit from wearable tech. People will not get breaks on their insurance, and insurers will not be able to reduce their risk substantially with the use of wearables.

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