“In 2018, we expect IoT devices to lead to personalized solutions in the area of health insurance, and lead to a move from Reactive Restitution models to Proactive Prevention models.” – State of FinTech Report 2018, MEDICI
Insurance 2.0 will bring new business models, opportunities for niche positioning, as well as enhanced profiling and predictive decisioning, powered by ubiquitous device connectivity and real-time, actionable analytics.
“It is estimated that up to 50 billion devices will be connected to the Internet by 2020. This equates to approximately six devices for every person in the world. Of course, connectivity comes with a cost. Leading companies are budgeting more than $100 million annually developing IoT systems today. Companies as diverse as GE, IBM, Cisco, Samsung, and Monsanto are currently investing billions into their IoT and analytics initiatives. Samsung alone is moving towards having their entire product line IoT-ready in the next five years.” – Ron Schaber, Second Vice President, Munich American Reassurance Company, in The Internet of Things and Life/Living Benefits Insurance
Advanced sensory technology also has a role to play in how growing IoT ecosystems collect data, getting underwriting to a whole another level with the opportunity to put together historical data and detailed streams of current data from a variety of connected devices. According to IBM, sensor-equipped devices transmit huge amounts of data, but analysis is needed to gain actionable insights.
“Advanced analytics can identify a policyholder’s risk profile, but also provide valuable feedback. With IoT for Insurance, insurers can use both structured and unstructured data to help policyholders manage a multitude of risks.” – IBM
Health insurance is one of the most important areas where connected devices will drive positive transformation for all parties involved. Driven by the ability to collect real-time health condition and change data, health maintenance organizations, businesses, and insurers will be armed with a foresight into appropriate risk management & loss prevention opportunities, as well as understand the impact of wellness programs and how to tune them for increased treatment efficiency & individual productivity. Interestingly, some estimates suggest that for every dollar spent on preventive care, employers can expect a $3 return.
Fortunately, a total of over 500 million units of smart wearable devices are forecasted to be sold by 2021, which will include more than 80 million smartwatches, 5.6 million body-worn cameras, almost 64 million wristbands, over 22 million sports watches, and millions of units in other categories.
Sports watches and other categories of condition monitoring devices can be used to track health and adjust policies based on risks associated with lifestyle. Some examples of linking personal devices to insurance include Erie Insurance’s tie-up with Google Glass and Beam’s connected toothbrush (the Beam Brush).
Oscar Healthcare, for example, started experimenting with enticing people to lead a healthy lifestyle for financial benefits four years ago. Forbes reported that through the partnership with wearable device company Misfit, the health insurer offers a program that links customer biometric information straight to their health insurance. With this program, Oscar clients can opt to receive a free Misfit wristband pedometer that will connect automatically to Oscar’s app. Once set up, the Oscar Misfit pays people to walk – each day they get a new target for the number of steps to take. If users hit the goal 20 times, they are rewarded with an Amazon $20 gift card (up to $240 a year).
As mentioned earlier, Samsung is already experimenting with health insurance + IoT model. At the end of 2017, Samsung announced its collaboration with UnitedHealthcare and Qualcomm Life, a wholly owned subsidiary of Qualcomm Inc., to offer Samsung Gear Fit2 Pro and Samsung Gear Sport in the UnitedHealthcare Motion™ wellness program. UnitedHealthcare members can choose Gear Fit2 Pro or Gear Sport, along with a pair of Level Active Wireless headphones, to stay on top of their personal fitness and wellness goals and even earn more than $1,000 per year by meeting certain daily walking goals. The wearables feature a Samsung-developed custom app called F.I.T., which tracks frequency, intensity, and tenacity of walking goals, as defined by UnitedHealthcare.
“The UnitedHealthcare Motion wellness program encourages and incentivizes members to stay active, which may lead to better health outcomes,” said David Rhew, M.D., chief medical officer and head of healthcare and fitness, Samsung Electronics America, in the official press release.
Earlier in 2017, CNBC reported that Apple and Aetna were in discussions to bring the Apple Watch to millions of Aetna customers. The insurer, which covers 23 million, offers an Apple Watch to its 50,000 employees as part of its corporate wellness program. Now, Aetna is reportedly negotiating with Apple on a plan to offer a free or discounted Apple Watch as a perk to its members. Previously, at the end of 2016, Aetna made Apple Watch available to select large employers and individual customers during open enrollment season.
Seeking a passive way to measure patients’ vital signs and other biometrics, more than 40% of healthcare organizations across the world will use IoT-enabled biosensors by 2019, according to IDC.
As Jon Carter, UK Head of Business Development – Connected Home, Deutsche Telekom AG, fairly noted, “This is a race to the surf, so to speak, with IoT being the next big wave to hit the insurance market. This will be much bigger than the move to direct sales or price aggregators. IoT will have a huge(ly) disruptive effect on insurance and we could see an upending of their entire model. As the earlier disruptions to hit this industry, the first movers will be the ones that define the landscape and capture the future value, as well as protect themselves from further disintermediation.”