You may not know it but your personal health could about to be up for sale. CoverUS, a start-up based in the USA announced significant investment and has entered the market with an app that allows users to ask insurers to bid on their requirements based on detailed personal health data that is exposed for underwriters to read. Meanwhile, last week, US insurer John Hancock announced it is making it mandatory for policy holders to wear a fitness tracking device so that policies can be priced appropriately based on their wellbeing metrics.
This has sparked a passionate argument for the ability of consumers to utilise all of their assets when being assessed for health-related insurances, even if that involves divulging personal data, versus commentators alarmed at the ramifications of such intrusiveness. Their concern is the inevitable anti-selection that would take place if policy holders were reluctant to share all of their data, or were disabled, or were abstaining due to security concerns.
A data-led approach to pricing differentiation is not new. ‘Black box’ GPS trackers have been very successfully adopted by the car insurance market to reward good young drivers. But when we apply this methodology to personal health data it seems to become significantly more divisive.
Inflationary pressures alone are inflating medical insurance premiums by 10 per cent annually. That’s barely tolerable in its own right – throw in secondary factors such as musculoskeletal (MSK) and mental health (MH) conditions and price hikes become untenable.
Evidence shows that frequent exercise, good diet, good sleep, mindfulness and early intervention can significantly reduce our predication to suffer from both MSK and MH. It does not take a genius to conclude that we should encourage users to do this and could potentially mandate mechanisms to verify it actually happens.
Evidence also suggests that many of the other key claiming categories such as heart disease, diabetes and even some cancers are also significantly reduced for those people who embrace a healthy lifestyle. With the emergence of affordable technology that can verify these activities we have all of the necessary elements for market disruption.
There is almost an inevitability about the direction we are beginning to take. So perhaps we need to direct our debate towards ‘consumer advocacy’, as there is a significant difference between a user being able to ‘choose’ to measure their wellness and then to ‘choose’ their insurer, and an insurance company ‘mandating’ that a policy holder utilises a wearable or risks having cover removed.
The evolutionary shift we are embarking on has to be about consumer choice and reward, not about insurer anti-selection. Even then we still need to find a workable solution for those living with disability or a chronic illness so that insurances remain a practical and affordable option for all.
Consumer insurance in almost every sector is declining – not just in healthcare. I recently heard an industry commentator call it a ‘generational apathy to consumer insurances’. I do not accept that. The modern consumer intrinsically understands the notion of value but modern insurances do not represent value on their terms. Perhaps CoverUS begins to address that.
I am genuinely encouraged by how health conscious millennials and in particular Generation Z are. It’s almost woven into their social norms. Concepts like veganism, mindfulness, therapy, counselling and exercise are not seen as fads but as a perfectly acceptable way of life. Equally when it comes to understanding technology, and data security, there is an inherent level of knowledge that is beyond other generations, and as a consequence, there is a relaxed stance about tracking and sharing data.
There is genuine excitement about using personal data to leverage better deals. Emerging consumer groups have grown up reading prompts on retail platforms such as ‘people like you also buy’, informed by their personal online habits and data. It’s why they will embrace this concept. It’s also why CoverUS even exists and it’s how they managed to get funded. Whatever misgivings we may have about a potential ‘health-data-crypto- currency’ future, this new wave of consumers will continue to insist we develop propositions that disrupt both outdated insurance products and what is fast becoming an obsolete methodology for pricing and valuing them.