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Wearable technology sounds really cool. Who doesn’t want a Fit Bit? But there are storm clouds gathering and it’s just the beginning!

This week, behemoth John Hancock, owned by Canada’s Manulife, fired a shot across the bow of the insurance industry. It announced it will only sell life insurance policies with participatory health data sharing options. 

John Hancock will focus on selling it’s new “behaviour change platform” known as Vitality.  They are discontinuing traditional life insurance sales in 2019.

This interactive insurance policy includes incentives, discounts or rewards, for healthy living based on data your wearable device provides. In theory, It sounds great. You save money on premiums, win prizes, get hotel discounts…

Wearable Technology

...and the insurance company makes more money by paying out fewer claims.

Looks like a win, win right???

Hmm...

Wearable Technology is the Future of Life Insurance

Anyone in the life insurance business who’s been paying attention can see the writing on the wall…

…but a lot of us are still living in denial about the reality of wearable technology and its impact on everything including life insurance.

Now there’s no question, at some point, you won’t be eligible for life insurance from a major carrier without sharing data.  That Fitbit app or the heart rate bracelet you just bought on Amazon is a little more complicated than you thought! From a company perspective, it’s kind of a no-brainer.

If the wearable technology is out there they are gonna use it.

Is There a Hidden Agenda or This Just Progress?

At first glance, this seems like an interesting concept. But you have to question the sincerity of a financial giant caring about your ultimate well being.

Some of Vitality’s initial perks seem very generous (nudge, nudge, wink, wink).  “Consumers can earn an Apple Watch for as little as $25 plus tax or receive a complimentary Fitbit device to make it easy to record their healthy activities.” When something seems too good to be true – it usually is! 

In fact, there are those that believe that the idea of companies supporting a healthy active lifestyle is being used to sell a hidden commercial agenda.

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Corporate big wigs have a different perspective. According to Brooks Tingle, President, and CEO of John Hancock Insurance, “Vitality on all life insurance policies, at no additional cost, is the right thing to do for our customers, our business and society...life insurers should care about how long and well their customers live.”

Marketing Is Everything & This is Genius

From a marketing vantage point, this move is pure genius for many reasons. 

It profoundly increases engagement opportunities. Traditionally, insurers speak with customers 1 or 2 times a year at most. Hey, people miss premium payments, extend their policies and change beneficiaries after all! The Vitality option offered by John Hancock (Manulife) maximizes these opportunities by connecting with each consumer ”approximately 576 times”. This increases customer retention, cross-selling and ultimately profits!

If a carrier wants to cull their consumer flock it’s an easier task.  Some insurers prefer to do business with educated, affluent, tech-savvy customers. That’s because they are lower risk. You’d be hard pressed to find a better way to accomplish this.

The Thing is NOTHING is as Simple as it First Appears! 

At some point, these wearable tech platforms will become standard across the market.

….which means you may no longer have a choice in the matter. So what does that mean? Will higher risk individuals go to other insurers or will they be out of luck when it comes to coverage?

There’s no doubt wearable technology introduces many new capabilities when it comes to the delivery of healthcare.  But it can also pose grave privacy risks.

How do you prevent the healthcare data intended for doctors and other specialists from getting into the hands of insurance companies…

…or anyone else for that matter? Does anyone honestly believe this won’t happen?

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The US has Some Protection in Place - How About Canada?

To better protect Americans in an increasingly digital world, legislators in the 90’s passed the Health Insurance Portability and Accountability Act (HIPAA).  This legislation gives patients more control over their health information. The problem is wearable technology devices are basically computers and vulnerable to hacking, especially when there’s a potential windfall at stake.

Not to mention the fact that end-user licensing agreements (EULAs) associated with these devices are deliberately complicated. These multipage documents are deliberately confusing and consumers don’t understand the legal ramifications when they sign on. 

Is wearable technology the gateway drug that’s ultimately going to lead us to accept more and more controls over our personal health data?

Your Privacy Is Important - Is Wearable Technology Compatible?

As wearable technology improves exponentially along with algorithms to farm the data, there’s a huge potential for widespread misuse. People underestimate the tremendous value attached to the continuous health data provided by wearable technology.

I also have a word of warning.  Just because these devices appear unsophisticated, don’t assume their impact isn’t profound.

Applications for aggregating and farming this data will develop at break-neck speed. This creates an infinite number of ways for life insurance companies to develop these programs.

wearable technology privacy

For example, let’s say you’re a young, healthy millennial purchasing a shorter term life insurance policy at a good rate. You opt for a wearable. Hey, who doesn’t want to save some money and win rewards – this seems like a smart decision.

But wait a minute! Your life insurance company detects an anomaly in your data. According to their latest algorithm, you’re a good candidate for a rare heart condition like hypertrophic cardiomyopathy (HCM). Ouch! 

In Reality All This Information May Cost You Money & Coverage

Fast forward 7 years. You have a mortgage, house and kids. When you reapply for a longer-term policy will the insurance company use this data against you? This could mean escalated premiums or even a declined application!  You also have to ask yourself, if this data will be shared by the 3rd party aggregators.  Of course, it will.

I know what you’re saying! All this doom and gloom, c’mon man, there’s gotta be an upside to this wearable technology fitness trend?

Absolutely there is. Recent consumer reports indicate a larger percentage of people are willing to make appointments online. Did you know consumer are even consulting with their doctors over skype? Our communities are increasingly using online platforms for diagnostic kits, prescriptions and advice. Whether consumers use apps and communicate with health professionals by text or social media, times they are a-changin’. As Bob Dylan would say! 

Early evidence seems to suggest that consumers who engage with the Manulife Vitality insurance platform or other related Fitbit programs find it extremely beneficial.

Who am I to say otherwise?

More Choice for High Risk Individuals?

Industry-wise, this trend toward wearable technology provides new opportunities for other carriers to niche down and create more products.  Specialized areas such as life insurance for high-risk people may benefit.

But let’s not forget, life insurance companies that say that they care about “how long and well their customers live” are the same corporations that are hyper-vigilant when it comes to vetting claims. Just read some of the customer reviews. 

…and they should, after all, it’s a business. In their hierarchy of values, even if they do care about customers, mitigating risk and making money for shareholders comes ahead of incentivizing healthy behaviour…

…and, last time I checked, Manulife is still a publicly traded company.

wearable technology heart disease

From Yahoo’s big data breach in 2013 to the Facebook debacle of 2017, it seems obvious that voluntarily sharing data is fraught with peril. Life insurance companies are no exception.

However, it looks like it may already be too late. The genie is out of the bottle. Tech dependent millennials have a different relationship to privacy.  Which means many of them are already jumping on this data sharing bandwagon without thought. I fear we may all be forced down that road along with them.

Only time will tell…

As more consumers sign up for interactive insurance policies like Vitality, security and privacy threats will rear their ugly heads. It’ll take some time, for the dust to settle. 

At Policy Architects, we’re well aware of the changing climate and have our finger on the pulse of underwriting guidelines. This is exactly the reason you need to consult an independent life insurance agent. We scan the news daily and know the ins and outs of all the insurance companies.

With or without wearable technology, we’ll identify the right product for your situation at the best possible price.