Wearable Technology & Insurance Industry
As wearable technology becomes more popular, insurance companies are finding they can benefit from it just as much as individuals can. Here’s why the advancements in wearable technology may be advantageous to both the public and insurers.
The Many Uses of Wearable Devices
Some of the most well-known wearable devices are fitness trackers, which are meant to count the number of steps people take throughout the day and the amount of calories they burn. But as the popularity of wearable devices grows, so does their functionality, leading to monitors and apps that can keep track of much more than fitness-related information. These days, it’s not uncommon for wearable devices to monitor heart rate, breathing, calorie intake, hydration, sleep, and even pain management.
Considering how useful this information is to insurers, it’s no surprise that they have come up with ways to benefit from it. After all, some insurance companies have been encouraging their customers to put tracking devices in their cars for years now in order to better calculate car insurance rates. Wearable devices can be just as helpful within the health insurance field.
The Ability to Offer Incentives
Just like tracking devices in cars, wearable devices make it easy for insurers to incentivize customers to make good decisions. Some have already started rewarding customers monetarily if their fitness tracker records a certain amount of exercise. After all, fitness trackers can easily send insurers information on the number of calories burned, at which point they can give customers a credit on their bill or simply money toward a gift card when they reach a certain goal. In this way, wearable devices can benefit both insurers and their customers.
More Accurate Rate Calculations
Most people understand that their rates are based on estimates and are not always reflective of their individual details. But wearable technology can change that. When an insurance company sees proof of how often a policyholder exercises, and also gets reports on their heart rate, cholesterol, and blood pressure, it’s easier to create a premium based on that individual’s actual health and lifestyle. For those who are healthy or are at least working to improve their health, using wearable devices can lower their premium.
Of course, there could be a few downsides to insurance companies relying on wearables for information. The main one is the privacy issue, since some people are not comfortable sharing information about their health, especially if there’s a chance it will be sold to a third party. So before encouraging the use of wearable devices, insurance companies need to reassure people that their sensitive data will be kept private.
Another potential problem is that only those who can afford wearable technology will have the chance to be rewarded with lower, more accurate rates. But as wearable technology grows more popular, the devices will likely become cheaper and therefore easier for most people to obtain. And this is good news for both individuals and insurance companies.