Many insurers use wearables and online tools to encourage and reward customers who live a healthier life – be that through exercise, diet or mental wellbeing. But better technology, allowing customers increased health awareness, presents challenges in the coming years.
Many underwriting measurements are fast becoming outdated and blunt. For example, body mass index has been criticised as an imperfect measure, with an athletic rugby player cited as a case of someone who might have a high BMI yet above average health by any other measure.
The balance is a tricky one for insurers. Recently, the overwhelming focus has been on increasing the percentage of people they can cover immediately, without recourse to further underwriting such as GP reports or medical examinations. This is good for advisers and clients, as the time taken to get policies on risk has dropped massively. It’s also good for the insurer as admin costs reduce.
However, advances in the health-tracking elements of smartphones and wearables, combined with new technologies which aim to capitalise on the increasing consumer appetite to understand personal health, will mean that insurers have to think harder about how they underwrite.
Take Thriva, a tech start-up offering subscription packages which allow customers to take a blood sample at home and send it for testing. Although small at present, they report that tens of thousands of people are spending £20 to £80 to carry out tests and manage health indicators via the company’s app.
As this type of innovation moves people from engaging with their health only when they’re ill, to a better understanding on an ongoing basis, we could see a point at which customers are applying for protection armed with a far better understanding of their propensity for a claim than even the most sophisticated actuarial calculations could provide.
Proving non-disclosure could be hard since presumably records from Thriva and similar outfits are not shared publicly and could even be anonymous or under a pseudonym.
As a countermeasure, insurers could look at how they capitalise on improving technology and partner with firms like Thriva, taking medical reporting and screening out of the hands of a beleaguered NHS and going direct to the customer.
Likewise, ongoing underwriting has, to date, been all carrot – rewards and premium discounts – and no stick. But reliable, auditable data could herald a new era of insurers and customers interacting more often than simply at purchase and claim.
Increasing screenings at point of purchase might delay applications but it could be seen as a benefit of taking cover, an idea promoted recently by Kathryn Knowles, managing director of specialist adviser firm, Cura, who vlogged about her nurse screening experience at the hands of British Friendly, via Square Health.
Kathryn considered the screening a great perk, a “health MOT” which she could easily promote to her clients as a bonus when buying protection.
This won’t work for every customer and the increased cost to insurers will inevitably be recouped in increased premiums, but it’s clear that insurers must have a strategy which includes these technological advances or mitigates against their effect.
Phil Jeynes is head of sales and marketing at UnderwriteMe
Follow him on Twitter @Jeyneus