We have written about wearable devices several times now and have concentrated mainly on the user’s perspective. Now we write about how insurers are incorporating wearables and the data they collect into products.
One such insurer is MLC in Australia which launched its ‘Life Insurance on Track’ product in November 2015. The key component of the programme is a Garmin Vivosmart HR fitness tracker which needs to be paired with a compatible smartphone. Policyholders have a target wellness score of 900 points to be eligible for premium discounts which can be achieved by activities such as:
- Walking 10,000 steps or being active for one hour a day
- Sleeping for seven to nine hours a day
- Keeping the tracker on for at least 18 hours a day
- Recording a resting heart rate of less than 85/minute.
If the policyholder reaches 900 points within 160 days they receive a 5% premium discount, and if they do it again in the next 160 days the discount rises to 10% of the premium for the life of the policy.
John Hancock in the US has implemented the Vitality programme developed by South Africa’s Discovery Life in which policyholders accumulate Vitality points which then give reward discounts on entertainment, shopping and travel purchases. At outset policyholders complete an on-line Vitality health review to measure their health relative to their age, and then receive personalised health goals for the year. A free Fitbit is part of the deal. Vitality points are earned by going to the gym, having annual health screenings and remaining tobacco-free. Each year the policyholder earns a Vitality status (bronze, silver or platinum) based on the Vitality points they accumulate and this can earn them a premium discount of up to 15% in the next policy year.
The Vitality programme is well established in markets like South Africa and the UK where now Vitality is taking the concept further by offering both upfront and annual premium discounts of up to 40% for term life cover. Members are encouraged to complete a health check every year (available at a greatly discounted price) measuring BMI, blood pressure, blood glucose and cholesterol. Any improvements in health are reflected in a premium discount.
This concept of ‘continuous underwriting’ or dynamic pricing is, of course, not new in South Africa where Discovery’s product incorporates ‘Vitality Drive’, in which customers can also earn life insurance premium discounts via monitoring of their driving habits.
AllLife in South Africa provides cover for those living with HIV, and for those who are not receiving antiretroviral therapy as well as those who are. Policyholders need to undergo six-monthly CD4 testing and adhere to their treatment regime. If they don’t comply with treatment or submit blood test results, then the sum assured is reduced.
AllLife also offers disability insurance to diabetics which it believes is a world first. Cover is available to smokers as well as non-smokers subject to cholesterol and HbA1c levels. After acceptance there is a diabetes control programme which is used to adjust premium escalations and requires an annual Hba1c test.
AllLife says ‘We help you to stay healthy so that your premiums stay low.’
In the UK in October 2016 Royal London introduced a similar concept of tailored life cover for diabetics. Targeted questions are asked at outset, and policyholders then share, on an annual basis, their Hba1c levels. If there has been any improvement in their condition the firm will look to reduce premiums.
It is great see such innovation in product design and how data from wearables and testing is being used to reduce premiums or offer cover to those who previously might not have been eligible.