Digital technology and the data that consumers are willing to provide are giving insurance agents a closer look at the day-to-day habits of individuals, with premiums and policies ideally being adjusted to better reflect risks. Among the most promising areas for this new world of insurance is wearables and fitness trackers, a point brought home in Fitbit’s most recent earnings, along with other developments.
Fitbit, in its Q3 earnings, which were released last week (Oct. 31), pointed to smartwatches and enterprise healthcare as two areas of future growth. Smartwatches now account for 49 percent of Fitbit revenue in the third quarter, up from 10 percent for the same period a year ago.
That growing popularity of smartwatches — Apple Watch still drives the wearables market, with Fitbit running just behind that company, at least when measured by the popularity of specific devices — increased the sources of fitness data, the treasure chest of information that goes into calculations of how much to charge for insurance policies, and what incentives to offer customers.
Fitbit also said it is working with federal regulators on tests of its technology for more use in healthcare — another sign that insurance firms will eventually come to rely more on the data gathered via such technology to craft policies.
Humana Move
In late September, Humana said it would use Fitbit Care, a recently released wearables platform from Fitbit that “combines health coaching and virtual care,” and stems from Fitbit’s acquisition earlier this year of Twine Health, the health coaching platform that aims to help people achieve better wellness outcomes.
Humana has not detailed any insurance discounts or incentives associated with enabling its employer group section consumers to use Fitbit Care.
For now at least, the technology will “provide Humana members across the U.S. with the support and guidance to help members make the lifestyle changes necessary to better manage chronic and complex diseases, while creating stronger connections between the participants and entire care team,” Fitbit said. “Coaches work with participants to create personalized care plans and connect with members through multiple channels that include in-app communications and phone and in-person meetings, giving people the flexibility to choose what works best with their lifestyle.”
John Hancock Plan
But it’s easy to imagine such fitness tracking and coaching technology being used to shape insurance. Recently, in fact, John Hancock said it would use fitness tracking technology to better inform its life insurance business, via its Vitality platform — which itself works with Apple Watch and Fitbit devices.
The general goal? To, in the words of one report, reduce “lifestyle diseases,” such as heart problems, diabetes and other disorders that can lead to death and insurance payouts. “Vitality claims its policyholders have been shown to live 13 to 21 years longer than the rest of the insured population, and to generate 30 percent lower hospitalization costs,” the report said.
Using wearables and fitness tracking technology not only provides relevant data to insurance companies, but it also apparently motivates consumers, as “John Hancock says its Vitality policyholders take nearly twice as many steps as the average American, and have logged more than three million healthy activities, including walking, swimming and biking.” As well, wearable and fitness tracking technology reportedly boosts consumer engagement, with policyholders who use those devices having nearly 600 engagement instances annually with John Hancock.
“The remarkable results of our Vitality offering convinced us this is the only path forward for the industry,” Brooks Tingle, president and CEO of the John Hancock Insurance division, told a reporter. “We have smartphones, smart cars and smart homes. It’s time for smart life insurance that meets the changing needs of consumers.”
Fitness Tracking Growth
Fitness tracking represents serious revenue and business opportunities, including for insurance. As demonstrated in a new PYMNTS deep dive into the data surrounding this issue, 40 million fitness trackers were sold in 2017, and 71 million smartwatches shipped this year. Based on current trends, the market is projected to reach $27.4 billion by 2022 — a sign that consumers are fully embracing the 24/7 insight into their personal health.
Millennials, in particular, have embraced the digital fitness trend, using sports and health apps more than other age groups. Fifty-four percent of all millennials are likely to buy a body-scanning device, while 46 percent want access to quantifiable data about their health activities. This is especially true of millennial women, who are twice as likely to use fitness apps as millennial men.
That said, serious issues remain as wearables and fitness tracking technology gains popularity among consumers and gets pulled closer into the mainstream of insurance. Data privacy and security is one area of concern, especially as it becomes clear that intimate data about consumer health and daily habits are going to be handled by and shared with various firms, not always just the insurance provider.
As well, the companies behind the wearable and fitness tracking technology “apply proprietary algorithms,” as one recent analysis noted, and no matter how sophisticated those formulas are, or how well-developed they become over time, there is always the worry that they will not accurately reflect all individual health conditions — at least, not to an extent that insurance mistakes are avoided. For instance, as this analysis said, “because the average calories burned while resting is different for every person, calculations of calories burned, such as those that appear on a treadmill, are still only estimates that are not particularly accurate.”
Still, “as the devices improve and data and algorithms become more reliable, it is highly likely that wearables will assist in the design of new approaches for health promotion and chronic disease management.”
The use of wearables and fitness trackers for insurance purposes is still in its infancy. But the growing popularity of smartwatches and associated devices, along with the continuing development of the software that runs them, and the clear ambitions of device providers and insurance firms — well, all that points to an increasingly important role for wearables and fitness trackers in the insurance world.
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