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Op-Ed: Wearables enter the insurance industry (Includes interview)

Wearable technology such as a watch or any device that attaches to the skin could help reduce those costly premiums. If the current trend is the internet of things the future could belong to the internet of the skin.

Health Self-Management

These devices are part of a larger trend towards self-management of our bodies and representative in such devices from Fitbit and Nike Fuelbands to Google Glass and Golden-I. These technologies collect an assortment of data including video and audio on the driving, eating, fitness and other lifestyle practices and sends near instantaneous health information to the wearer.

The next step, according to Dominik Groenen, Head of Finance Unit for mediaman and Founder and CSO of Cologne Area, Germany based Erste Digital, is to use the information to reduce your insurance premiums.

“The information from these wearable devices could be shared with the insurance company,” says Groenen. “This would allow the insurance industry to create better underwriting and more specific pricing.”

This more specific pricing means that instead of having your insurance premium adjusted yearly, insurance companies could conceivably adjust your premiums daily based on information from the devices–creating the possibility of instantly lowered premiums for individuals who are maintaining healthy lifestyle choices.

New Insurance Policies

“This new technology has the potential to create totally new kinds of premiums based on the use,” says Groenen. “This is already being instituted in Germany for car insurance. There is a policy called Pay as You Drive in which you only pay if you are really using your car.”

For healthcare, this could mean a reduction in premiums if you are taking care of your body or only using certain services.

This wealth of information on your health also has the potential to be managed with third parties such as retailers or pharmaceutical companies.

According to Groenen, “The insurance provider wouldn’t sell the information but they would use it to build relationships. This could potentially lead to individuals getting preferred pricing with a retailer or pharma company on specific products.”

Privacy Enters The Body

As with all technological advances, the issue of privacy and ownership of the data is a major concern to consumers. According to a report by Price Waterhouse Cooper (PWC), “One in five Americans owns a wearable and one in ten wears them daily.”

In addition, the report cited, “86 percent said wearable technology would make users vulnerable to security breaches and 82 percent feared it would invade their privacy.”

This fear is already being addressed by the technology companies as they have agreed that customers will own and have control over data acquired by wearable devices according to Denise Garth, a partner at the research firm SMA in an article in the Insurance Journal.

“By authorizing the use and access of that (information), they’re going to expect something in return. So what they’re going to expect in return is probably some kind of discount, some kind of service, something else that’s going to be a value that they’re willing to share their data,” Garth said.

Lifeloggers Journals

For some early adopters in the use of wearable technology privacy is not an issue. People known as Lifeloggers are using mobile apps that collect their daily data to share their ongoing life story with the world in general. This includes products such as Saga and Narrato which describe themselves as a digital autobiography or digital journal that collates data from apps such as Facebook, Instagram and numerous fitness trackers.

The user can then share this information with others while creating a digital memory of their life and health. For this group, sharing of private information is outweighed by the benefits they see in creating a health history. The use of this information is just a natural extension of the personal journals they keep and gives them more control over their health.

Detecting Emergency Conditions

Currently, the use of wearables is designed to give the wearer a history of their health and lifestyle choices. In the future, such devices could be used to send information directly to their doctor. That data could help detect a sudden emergency such as a stroke or heart attack. Such applications are exciting–and are being aggressively embraced by the NHS.

According to an article in the Guardian with NHS England’s chief executive Simon Stevens and its medical director Sir Bruce Keogh, both are “keen to explore what technology can do for us and for those who take care of us when we are sick.”

Stevens and Keogh believe that patients at risk for conditions such as heart disease, liver failure, diabetes or asthma could wear devices that can detect worrying symptoms and then transmit a message to hospital wirelessly. This could then alert a medical professional, who would then visit them at home–potentially saving lives and reducing the demands on emergency departments.

Saving Money, Saving Lives

According to Dominik Groenen, when this technology is fully realized, the savings on insurance premiums could become substantial.

“Devices that could alert medical professionals to a potentially life threatening condition could be a game changer for the industry and consumers alike. Just wearing the device could result in a reduction of preventable fatalities which could be passed on in premium discounts,” states Groenen.

It is a given that the future of wearable technologies will change how individuals monitor their health. It is also a given that this is going to have a major impact on the insurance industry. A seismic shift in how premiums are calculated could result in savings that will allow consumers to put that money into an improved lifestyle. The potential is unlimited and all realized by harnessing the power of your skin.

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