As advanced, network-enabled technology continues to permeate every aspect of life, debates about the trade-off between convenience and privacy have been understandably frequent. The speed with which these devices have evolved has made the lines between the two considerations incredibly blurry. Still, technology like fitness tracking continues to become more popular, and its use outside of the personal sphere is showing even greater promise.
The rise of wearable technology, as it is known, has the potential to affect many facets of everyday life. One of the most promising avenues for this new frontier in tech is in the insurance industry. Already, some auto insurance providers have been offering devices within cars that can track mileage and provide a more affordable rate if the user doesn’t drive as frequently. Now that wearable technology has gotten advanced enough to provide detailed telemetry and health vitals, life insurance companies have been looking to follow this trend in increasing numbers. The Insurance Journal reported in May 2015 that the trend has serious potential to cause a paradigm shift within the life insurance sphere.
However, insurance providers as well as their customers remain largely skeptical of wearables despite the potential they hold as unique business opportunities. Insurance Journal noted that many consumers are frightened by the prospect of being “watched” by an insurance provider. Since the idea of a life insurance monitoring device would be to ensure a client’s health is in check, many also believe they may be “punished” with higher premiums or fees for failing to maintain a clean bill of health. Therefore, the uptake of new insurance strategies that involve wearable tech has been slower than what’s now possible.
The insurance market for wearables
This may begin to change as insurance consumers begin to trend younger and become more open to new products and services like wearables. To figure out who might make a good candidate for these innovations, LIMRA conducted a survey on the potential wearable adopters could find within the life insurance market. Overall, LIMRA estimated 38 percent of current life insurance consumers would be likely to sign up for life insurance that regularly monitored their health. In exchange, these consumers reported they would like to see some sort of monetary benefit, like a premium discount or other reward, indicating there is still a perceived tradeoff.
LIMRA also found some common characteristics of consumers who were open to the idea of constant health monitoring as part of a life insurance policy:
- Receptive consumers tended to be in the millennial age group
- They reported more frequent use of retail rewards programs and special offers
- Most already owned a wearable fitness tracker
Some of this may seem like obvious information, but it is nonetheless useful for insurers who may be considering offering these incentives to their consumer base.
In terms of concrete incentives for switching to a policy involving monitoring, LIMRA found that the most effective perk was perhaps the least surprising: money. Sixty-eight percent said the amount of money they could save on premiums would be a primary motivating factor in their decision to allow health monitoring. Consumers were also more receptive to the idea if they could gain additional coverage for the same price they already paid, which could effectively amount to a discount. Another 34 percent of respondents said other ancillary perks, like a gym membership or advice on maintaining optimal health, would convince them to use wearable monitors.
Still, LIMRA also found that one in nine respondents did not want any part of wearable monitoring plans, no matter what the perks were. While that’s a considerable proportion, it’s not unlikely that these devices could become even more commonplace very soon.