Integrating active data into insurance policies
Life and health insurance business is divided into the short term annual renewables, such as health; and long term, which may go out 30 years, such as life insurance and critical illness.
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Typically for long term policies, insurers will only talk to insured parties twice, once when they take out the policy and once when they claim. Although there is interaction with health policy holders, there historically has been an aversion to dialogue on longer term products.
When an applicant seeks life insurance, they must fill in a detailed health and lifestyle questionnaire. There are elements of this declaration, such as genetic diseases, which may require an increased premium charge, and about which little can be done. However, there are conditions, which are actionable, notably being overweight or having type 2 diabetes. Both can carry an underwriting surcharge; but neither are fixed necessarily at the time of policy acquisition. Weight can be reduced by most individuals, diabetes can be controlled and managed. On the other side of the coin, there is the potential that individuals deteriorate in these risk categories over time. The only way of knowing, from the point of view of an insurer, is to continually interact with policy holders over the duration of a policy and to undertake continuous underwriting over the lifetime of a policy.
Two British insurers are now taking up continual monitoring of these substandard lives, as they are termed in the industry. This is not without difficulties, for example, non-reporting in mandatory cases, or selective and possibly inaccurate responses. Moreover, not all insured parties want to spend money on a health check. One innovative UK company is taking this further, and using the same principle for standard lives. They send their policyholders on a heavily subsidized medical check every couple of years and provide premium discounts as a result. This insurer also has a scheme for general health linked to points earned for visiting the gym and eating healthily. These points go on to provide rewards.
Swiss Re itself is exploring a similar scheme. It has teamed up with a local Indian insurer and GoQii, an online wellness platform that monitors and tracks key health points, incentivizes better behaviour and provides a support network of lifestyle and health coaches. It is the fastest growing activity tracker system in India currently. This system will soon be built into an insurance solution, which will be fed by automatic data from the GoQii scoring system rather than manual input. These will capture around 40% of the 50-60 health indicators GoQii measures, a far wider range than other schemes have tried hitherto. However, the scheme will not immediately allow dynamic pricing, as the UK programmes do; this will be introduced at a later date.
We do not know exactly how well exercise correlates with improved lives. It may not be as big an indicator as either weight ratios or smoking. Nonetheless, fitness does have a demonstrable effect on life expectancy, and as such, we should expect more life firms to be looking at this technology in the near future.
Summary of Ben Randall's presentation at the Centre's Health monitoring event in December 2017. Ben is Manager L&H Individual Life UK& Ireland at Swiss Re. Summary by Simon Woodward.