Insurers can benefit from the use of individual monitoring technology, if they can develop a high level of trust with customers, according to Quadrant Information Services.
The pricing analytics firm said that the combination of miniaturised data collection devices and powerful big data analysis is beginning to have a transformative effect on the insurance industry.
Quadrant highlighted how health-related wearables, such as the Fitbit and Jawbone, are playing a new and rapidly growing role in setting rates for health insurance.
According to a recent study conducted by Boston-based research group Strategy Meets Action, while only three percent of health insurers are currently using wearable devices to help set individual rates, nearly 22% of health insurance carriers are in the process of developing a strategy to deploy such devices.
“In many ways, this is a terrific idea,” commented Quadrant CEO Michael Macauley. “It offers carriers a much more nuanced approach to rate-setting, and for many consumers it could offer lower insurance costs. It could also, by focusing attention on day-to-day fitness, have a beneficial effect on the nation’s overall health.”
Macauley adds that there are issues regarding this technology that need to be carefully handled, among them data security and privacy. He says the benefits are compelling, however, and both employers and carriers are beginning to find ways to implement the technology without alienating customers.