How active are you? Your life insurance carrier may soon have the data to decide.
John Hancock, one of the largest life insurance companies in North America, will stop selling traditional policies in favor of offering interactive policies that track health and fitness using wearable technology such as Fitbits.
According to Reuters:
Policyholders score premium discounts for hitting exercise targets tracked on wearable devices such as a Fitbit or Apple Watch and get gift cards for retail stores and other perks by logging their workouts and healthy food purchases in an app.
In theory, everybody wins, as policyholders are incentivized to adopt healthy habits and insurance companies collect more premiums and pay less in claims if customers live longer.
Privacy and consumer advocates have raised questions about whether insurers may eventually use data to select the most profitable customers, while hiking rates for those who do not participate. The insurance industry has said that it is heavily regulated and must justify, in actuarial terms, its reasons for any rate increases or policy changes.
The life insurance moves are part of a larger trend in the insurance industry of incorporating modern technology into a traditional industry. Part of that collecting data to determine discounts.
About a month ago, Root Insurance attained a $1 billion valuation after raising $100 million from venture capitalists. That company uses an app to measure safe driving and dole out discounts arising from the data.
According to TechCrunch:
Insurance technology companies have raised multiple billions of dollars in the past four years as venture capitalists finance industry disruptors and enabling technologies for established players to fend off new technology-based challengers.
In the month since tech-enabled car insurance startup Root Insurance joined the billion dollar club after its $100 million investment round, new investments in startups serving insurers in categories like life insurance, liability insurance, and — most notably — in insurance assessment and analysis services illustrate both the pace of dealmaking in the category and the breadth of technologies being developed for the industry.