According to a recent report by Accenture, 63 percent of surveyed insurance executives believe thatwearable technologies will be widely adopted by the insurance industry within two years, and 31 percent say they are already using wearables to engage customers.
I can’t say I’m surprised by these statistics from the “Accenture Technology Vision for Insurance 2015” report. Sapiens’ life and health customers and prospective customers are increasingly asking how to plan for and leverage wearables, which will be owned by 33 percent of U.S. consumers by the end of 2017, when investigating appropriate insurance software systems.
The insurance industry has already started to run with this opportunity. Cigna, a global health insurance service, teamed with Samsung to jointly develop health and wellness-related features on the company’s mobile devices. And John Hancock Financial recently became the first U.S. insurer to offer discounts to policyholderswho wear Internet-connected fitness trackers.
Wearable technology benefits users and insurers.
Insurance companies can reap many potential benefits from integrating with wearable technology. First of all, healthier, more active customers will require fewer appointments, tests and hospital visits. Perhaps most importantly, health coverage decisions will be formulated with the latest and most accurate information, reducing insurers’ exposure to risk (which will of course lower their costs).
Wearables can be used to increase customer loyalty and strengthen insurers’ brands, via popular apps, gamification and social media. And usage-based insurance (UBI) programs, based on data from wearables, will enable insurers to provide more personalized programs and enhanced customer service.
For instance, John Hancock Financial is offering customers who sign up for a new life policy a Fitbit (a bracelet that can track activity, exercise, sleep, etc.). The more these new customers exercise, the bigger discount they can receive on their insurance premium (up to 15 percent). Usage-based insurance (UBI) is already having a significant impact on the property and casualty/general insurance market. By putting wireless devices in cars, insurers are monitoring risky driving behavior and rewarding good drivers with lowered premiums and preferred rates.
Not So Fast…
Before reaping the benefits from wearables, insurers will have to carefully consider their strategies and take a few necessary steps:
Two important notes regarding the steps above:
Insurers who follow the above tips can maximize the wearable opportunity.