From fitness trackers to smartwatches, these technologies can capture a range of health metrics that paint a detailed picture of an individual’s health and lifestyle. This wearable tech data could offer a promising path for insurance providers to incentivize healthier behaviors, cut claims costs and lower premiums. However, it may come with controversies they must consider before implementation.
The Rise of Wearable Tech in Health Insurance
With the capability to track movement, wearables like fitness trackers and smartwatches create a data-driven approach to better health. Recent research has shown even short bursts of activity for 4.4 minutes daily can lead to significant health benefits. The scientists found a link to a 26% to 30% reduction in all-cause and cancer mortality risk with a “vigorous intermittent lifestyle activity.” They also saw a 32% to 34% decrease in cardiovascular disease mortality risk.
With wearables promoting a healthier lifestyle among users, several health insurance providers have started incentivizing customers to use this tech. For example, John Hancock’s Vitality program provides policyholders with premium discounts in exchange for using wearables to meet fitness goals. Similarly, UnitedHealthcare Motion allows members to earn rewards by completing fitness challenges through wearable devices.
Wearables are becoming top preventive care tools, reshaping insurance’s approach to risk management. Health insurance providers are now prioritizing well-being and creating a model that nudges users to stay proactive about their health.
The Pros of Wearables in Health Insurance
As wearable technology continues to gain traction in the health insurance industry, a range of benefits emerge.
1. Potential for Personalized Premiums
The health data collected through these devices could allow insurers to tailor rates more accurately to each individual’s health profile, potentially lowering costs for those who maintain healthy lifestyles. This is particularly beneficial for the 29% of U.S. citizens who reported unmanageable debt levels in 2023. Lower premiums could ease the financial burden and stress for those struggling with expenses, making health insurance more affordable and accessible.
2. Encourages Healthier Lifestyles
Smartwatches have proven to motivate individuals to adopt healthier lifestyles. These technologies can track everything from daily steps to calorie intake, notifying users when they need to keep engaging in physical health. This ongoing tracking allows patients to monitor their health goals and continue to maintain healthy habits.
Insurers that monitor this data can reward patients for healthy behaviors. This further encourages policyholders to pursue fitness goals, establishing a wellness-focused insurance experience. When people take care of their health over time, insurers can reduce claims and associated costs.
3. Early Detection and Prevention
Wearables can detect early indicators of potential health issues before they become serious. For instance, irregular heart rates or blood pressure anomalies could prompt users to seek medical care sooner, potentially catching issues in the early stages. This constant monitoring benefits policyholders and insurers, as early intervention reduces the need for expensive treatments.
4. Data-Driven Insights
The health data these devices generate offer insurers valuable insights into policyholder behavior and health trends. Analyzing this data enables insurance businesses to refine their offerings, identify common health challenges and develop solutions that address these issues. With a data-driven approach, insurers can foster stronger customer relationships and position themselves as more than a provider of coverage.
The Cons of Wearables in Health Insurance
While wearables present exciting opportunities for the health insurance industry, there are also notable challenges and concerns to consider:
- Privacy concerns: Wearables collect extensive personal health information, raising serious concerns about data privacy and potentially misusing sensitive information. If improperly safeguarded, this data could be vulnerable to breaches, unauthorized access or even third-party exploitations.
- Discrimination risks: Personalized premiums based on health metrics could lead to discrimination, as those with preexisting conditions or less active lifestyles may face higher premiums. This approach could unfairly penalize people based on factors beyond their control.
- Potential risk for penalty: While insurers are using rewards programs to encourage a healthier lifestyle, nothing is stopping them from penalizing wearers for not reaching their health goals. Health insurance brands could increase premiums or deny insurance access as a result, raising ethical concerns.
- Technical limitations and accuracy: Although wearables are advancing in capability, they have some flaws. Inaccurate readings or malfunctions can result in misleading health metrics, which could affect insurance decisions or lead to unjustified premium adjustments.
Weighing the Future of Wearables in Health Insurance
Wearable technology is becoming more sophisticated, so its role in health insurance will likely grow. On one hand, it offers insurers and policyholders an exciting opportunity to enhance health monitoring and reduce insurance costs. For many, the personalized approach could pivot health insurance to a more proactive and wellness-focused model.
However, there are important challenges to consider, from privacy concerns to unfair premium adjustments. Whether wearable tech and health insurance are a good match depends on how insurers implement and govern this integration.
By Zac Amos, ReHack