Riding the wellness trend: innovations in health and life

America has a public health problem. Too many Americans die too soon, too many spend decades suffering from chronic ill health, and too much of this mortality and morbidity is preventable. At birth in 2022, the average American will live for 77.5 years, a term which is lower than pre-pandemic levels and far behind the nation’s wealthy peers: Japan, Korea, Portugal, the UK and Italy all enjoy life expectancy of 80 years or more¹.

Wearable health tracking devices, from smart phones to watches and heart rate monitors, can clearly play a role in helping people take more responsibility for their own health. US life and annuities companies, which were struggling to achieve profitable growth even before the pandemic² and are dealing with the financial consequences of eroding public health, are keen to explore ways to leverage the technology to not only improve health outcomes but also reframe the insurance proposition towards one of prevention rather than compensation.

The wellness market is huge, and presents enormous opportunities for insurers able to surf the wave³:

‘Wearable tech is transforming the industry,’ said Stephen Mitchley, Chief Strategy Officer of Vitality Group, one of the pioneers in this field. ‘It helps with the day to day with consistency of engagement and behavior change, as well as leading to a fundamental change in the relationship with the insurer.’

Rather than life or health insurance being something people never think about other than when the worst happens, technology is creating new opportunities for engagement, building brand visibility and restoring trust. ‘The emphasis on the customer relationship is critical,’ said Amir Abdullah, Head of Product, US at employee benefits company YuLife, which has built an app that uses behavioral science and gamification techniques to incentivize healthy habits, such as physical exercise, mindfulness and brain training. For each wellbeing challenge completed, users are rewarded with YuCoin, which can be converted into charity donations or exchanged for vouchers to spend at their favorite retailers.

It’s a way to encourage users to share data that they might otherwise be reluctant to reveal. When trust is built, customers will share more data, which can be analyzed and displayed in dashboards to further nudge customers towards better habits and adding value to their daily life in the most fundamental of ways.

This in turn will allow insurers to innovate processes, especially underwriting, and get rid of inefficiencies, as Stephen Mitchley from Vitality explains:

The key is to be transparent about how the data will be used and what impact it might have on premiums. The sensitive nature of the data is one reason why there’s been limited penetration of wearables in insurance pricing, said Christy Lane, Co-Founder and President of Flora, which provides cover for those undergoing fertility treatment.

She pointed out that when she was undertaking clinical research into wearables ten years ago, she expected the technology to be rapidly adopted by carriers because physical exercise, sleep and heart rate have such a material impact on predicting mortality and chronic disease. However, this did not come to pass.

The challenge is not about extracting the data, analyzing it or building the models, the challenge is about who has the confidence to go to regulators with this. We know from telematics that this type of product works. Now we need the decision-makers to make the call to say we need to start incorporating this data into pricing.

CHRISTY LANE

CO-FOUNDER AND PRESIDENT, FLORA

Importantly, a wearables-based health policy doesn’t require customers to acquire expensive kit, such as heart rate monitors or the latest Apple gadget.

‘The key piece of technology is already in everybody’s pocket,’ said Lane. ‘Your phone is there right now and can collect so much data, on motion, sleep and blood glucose, and because everyone has a phone, it increases accessibility.’

Carriers clearly have more work to do to convince customers and regulators they can be trusted with this data. Given the stakes - for individuals, employers and society at large - it’s a subject likely to attract further debate at Insurance Innovators.

https://www.cdc.gov/mmwr/volumes/73/wr/mm7313a5.htm
https://www.mckinsey.com/industries/financial-services/our-insights/the-productivity-imperative-for-us-life-and-annuities-carriers
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/still-feeling-good-the-us-wellness-market-continues-to-boom