Wearable Technology and Life Insurance

I’ve been interested in how “wearables” could change the way underwriters look at individuals who apply for insurance. From my perspective you could look at two examples where this could make profound changes to the insurance industry.

One is from the perspective of the very sick…

Today, one of the fastest growing diseases in America is the epidemic of type 2 diabetes.

From an underwriting perspective the number that means the most when making decisions with diabetics, of course, is the A1C rating. Many diabetics can get a favorable life insurance rating if their A1C rating is below a 7. But that number only tells half of the story. An A1C only gives an average over a period of time, typically three to six months.

One of the most exciting breakthroughs for diabetics is the continuous glucose monitor (CGM). This device reads blood sugars every five minutes. Today, some of these devices can send the data to a smart phone via Bluetooth. Within this year, these devices will be able to send this information to the cloud, making it easier for an endocrinologist to treat their patients. All good for general health purposes …

But what if an insurance company could make an initial offer to a diabetic with an acceptable A1C and then offer to lower that rate once they have collected six months’ worth of continuous glucose readings?

If those numbers were fed to a database that worked with an underwriting engine--technology available today—could they better manage mortality risk with diabetics and also make their offers more competitive?

And the other is from the perspective of the very healthy …

If one side of this perspective provides insurance carriers an opportunity to offer insurance to a previously overlooked segment, the other potentially represents a sea change in terms of how insurance may be offered.

Ten years ago an actuary friend of mine offered up a vision of the life insurance future. He stated that in the future, people would walk around with their health histories on their wrists and would allow insurance companies to view those histories and bid for their business … a model not unlike Lending Tree.

Of course at the time we wrote him off as crazy…

Fast forward to today. Connectivity between wearable devices like FitBit and Garmin has only improved over the past couple of years. These devices feed up-to-the-minute health data to the Apple Health App as well as fitness apps like Strava. The capability is there to keep all heath data on these devices.

For an athlete, this could help in terms of targeting the ideal cardio rate for the best workout.
For the person shopping for life insurance, it could change the game, putting the power in the hands (or the wrists) of the applicant.

Assuming the appropriate privacy protections were in place, could we be close to the model that my actuary friend first promoted?

More importantly, will we owe him a royalty on this idea?

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