Just as telematics has been supplementing motor vehicle insurance underwriting, Australia’s health and life insurance markets are embracing innovative technologies in the form of “wearables”.
Underwriters traditionally rely on pre-policy questionnaires and proposal forms to assess risk and set the terms of cover they will accept; however, the information that can be obtained provides only limited insight into the health of an individual.
Devices such as Fitbits and smart watches, collectively labelled ‘wearable technology’, offer underwriters an unprecedented opportunity to gain access to real-time, detailed information about an individual’s lifestyle, including exercise and sleep patterns. This allows underwriters to predict risk more accurately, rewarding those who lead a healthy lifestyle, and perhaps, in future, offering higher premiums and less favourable terms to those who don’t.
Recently, an airline announced that its loyalty members will be able to earn loyalty points by meeting activity targets set via a wellness app. The success of each member’s efforts in meeting these targets is tracked by wearable technology.
Life insurers MLC and AIA Australia have also rolled out similar programs. MLC has provided 1500 existing members with smart watches, which track heart rate, sleep patterns and physical activity. Members earn points for good habits, and if their lifestyle appears to have improved over a set period of time, they are rewarded with discounted premiums.
There is little doubt that the rewards offered will attract consumers. This is yet another example of digital disruption in the insurance industry – where the use of data and the interconnectivity of devices (such as wearables) is providing new business opportunities for insurers willing to embrace innovative technology.