How smart watches can transform the insurance industry
Last year Australian insurer MLC made headlines by making a simple offer to potential customers.
If customers were willing to wear an Intel smart watch and improve their eating/exercise habits, MLC pledged a discount of up to 10 per cent on their premiums.
Customers would reportedly have between 90 and 160 days to achieve what MLC stipulates to be a “target wellness score” and each customer gets two shots at meeting the challenge.
It’s kind of like the health equivalent of a black box recorder on a plane.
MLC chief underwriter Fiona Guscott told The Australian that this could change the underwriting process for the industry as a whole, “Now we’ll be able to see from the smartwatch if they’re exercising well and sleeping well. We can see that and reward them for that with the discount. That's the first thing, it's a really different way of getting useful information from our customers.”
Currently, anyone interested in taking out a policy with MLC can only talk about the negative aspects of their medical history and lifestyle in an interview and fill out an annoying 30-40 page questionnaire.
MLC’s executive general manager David Hackett was bullish about the machine and its potential to change the industry, saying, “We're exploring other ways of assessing risk of individuals. It's a potential game changer for the industry. For too long, companies have relied on old ways to do business. We want to create more value for an insurance customer than the policy itself.”
But not everybody is as thrilled about the changes, and many people are wary about the potential for companies to use this data in a way that is invading individual’s privacy.
Consumers are also worried about the ability for insurers to penalise them with higher premiums when they learn of their bad habits, and the federal government has opened the door to allowing companies to offer different premiums based on the personal risk factor of individuals.
Whether or not this move becomes one that is adopted by the broader insurance industry at large remains to be seen, but it’s hard to ignore the Orwellian element in all of this, that has our specific data tracked down to a miniature.
That being said if there is a push against it who knows where it will eventually go. It is up to consumers to remain vigilant and ensure they don’t get ripped off.
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