You knew this was coming right?
In an age of FitBit, Apple Health, Smart This and Smart That, we’ve known for a long time that insurers would love to get their hands on, well, everything really.
When setting premiums, underwriters pore over a pile of statistical data to assess the risk you present vs. the return the company will receive via your monthly contributions to their coffers.
While it is science honed over many years, it relies heavily upon on data averaged from hundreds, thousands or even millions of other “average” people of similar ages, body types and with the same medical conditions that you have declared on your application.
So… there could be some variance between you and Joe average that could mean you present a lower or higher risk in terms of the returns the insurance company could hope to obtain from your custom.
How could the insurance firm ensure that it stacks things further in its favour then?
Simple – by collecting more data and, specifically, by collecting your data.
Those of you who track how many sit-ups you’re doing each day, how far you are running, how often you take the bike out and even how often you get “lucky” have much to offer the insurance industry and it is very keen to learn.
In fact, KSL.com reported over the weekend how the US now has its first insurer basing quotes off individual empirical data, obtained via fitness tracking technology.
John Hancock insurance company is offering a discount to customers who are prepared to share their health data, with the alpha males and females among its clientele eligible for a cut of up to 15% in their premiums.
But whoa betide any fitness freaks who slack off for too long – data is continuously monitored and premiums could creep back up when health levels are deemed to have dipped too far.
But if you are dedicated, and fancy being labelled a platinum level fitness freak it’s all good, right?
I don’t think so.
Let’s think about this logically – what are you trading for that small monthly saving on your insurance costs?
Well here’s a short list off the top of my head:
- your health data
- your motivational levels
- your location, which will likely make pinpointing your home a breeze
- your financial situation – fitness trackers are typically owned by the more affluent members of society
- your privacy – your insurer will know where you go, when, and possibly even who you meet if they wear a tracker
- your security – where is your data stored and who by; what security measures are in place to keep it safe?
And, perhaps, your morals too.
After all, insurance companies, like any other type of business, are in it for the money. If they are offering discounts to some customers how are they going to pay for it?
Sure, having better data may cut the costs somewhat but there is also a darker side here in my opinion – what happens to those people who cannot afford fitness trackers, choose not to own one, or have one and are chronically unfit either through choice or due to an accident or via disability from birth?
Though there is no word from John Hancock, I can imagine premiums for those who are not handing their data over could well rise faster that normal to compensate for the loss of profit brought about by offering premium discounts and other incentives to the fitter members of society.
Putting aside the multitude of security concerns, is that the future we want from our insurance industry?
I don’t, but I suspect we’ll see similar schemes on offer from UK insurers in the not-too-distant future. Hopefully when, in the future, it becomes mandatory to wear one (I know, I like a good conspiracy theory), they’ll come in black so they match the boxes we’ll be forced to have in our cars which, you know, also cut our insurance premiums.