Wearable and tracking technology has the potential to revolutionise the insurance industry, encouraging personalisation and customisation and saving costs for customers and insurers. While the possibilities of these technologies have proven to be endless, their limited market acceptance is becoming a concern.
GlobalData’s 2019 customer survey found that only 3.6% of private medical insurance policyholders in the UK would consider using tracking technology to improve their overall health or save on insurance costs. Meanwhile, 2018 survey data revealed that only 13.4% of UK motor insurance policyholders use telematics devices.
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One way that insurers are attempting to overcome market resistance is through a third-party rewards-based system that creates nudges to influence customers’ lifestyle behaviour. The most notorious such platform is Vitality’s sleep initiative, which was introduced in Asia Pacific with the help of AIA.
The initiative was launched after a 2018 AIA survey discovered that 45% of employees in Hong Kong, Thailand, and Malaysia get less than seven hours of sleep. It aims to raise awareness of the health benefits associated with getting sufficient sleep and includes sleep assessments, sleep tracking, and sleep-based rewards.
While the initiative is viewed as a creative way for insurers to encourage wearable technology and improve their corporate social responsibility image, there are other underlying lessons that insurers should take into consideration.
Consumers in different countries in Asia Pacific have different sleeping habits, with strong roots in the napping culture. For example, all capital cities in Hong Kong, Thailand, and Malaysia have well-established shared economy models of capsule hotels, where working individuals check in over lunchtime for a one- to two-hour nap.
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By GlobalDataUnfortunately, napping is not featured in Vitality’s reward points system. Additionally, different economic circumstances in the region have created a culture of high competition among employees, especially in countries in the southeast and east of Asia.
If Vitality had taken these factors into consideration, it would have given its platform a unique competitive edge to succeed. As it currently stands, the platform financially rewards those who have the luxury to get more sleep, makes it harder for the working class to reap the rewards, and fails to compensate those who take naps during the day. Overall, it could be argued that Vitality and AIA have compounded the severe economic disparity that already exists in all three countries.
The initiative highlights the ongoing changes that technologies have on social organisations and the unintended secondary long-term implications. These are the very reason for consumers’ skepticism towards wearable and tracking devices in the first place.
An alternative approach would have been to reward customers for simply taking the interest to track and improve their sleeping habits.
As an emerging industry, insurtech has immense potential to revolutionise insurance. However, for the technology to penetrate the user market, insurers will need to present it as more than just a binary tool to decrease customers’ premiums and increase the level of personalised services. They need to take a more active role in understanding the consequences of wearable and tracking technology beyond its ability to decrease claims.
