According to Global Data’s 2017 UK Insurance Consumer Survey, 23.2% of respondents own a wearable device.

Wearables are more likely to be owned by younger, affluent males. Although individuals may own a wearable device they may not have protection.

Out of all respondents only 11% owned a wearable device and held at least one type of personal protection insurance.

This rises to 19.5% for 18–34s and 13.6% for 35–49s, highlighting that younger consumers are a key demographic to target with personalized protection policies. Wearables could be a way to encourage more customers to purchase protection.

They provide greater interaction between insurers and customers, and can provide an element of challenge and gamification to improving health.

According to GlobalData’s 2017 consumer survey, consumers are interested:

• In using wearables and apps to better understand their habits and behaviour
• The most common things consumers use wearables for is to monitor exercise/fitness and weight.
• It is not yet possible to measure certain data points using current mass market technology

But as technology develops, measuring the likes of alcohol consumption, skin condition, and sun exposure will become standard in wearables, apps, and other connected devices. Consumers are already interested in collecting data about these factors. As apps and wearables expand to measure these new data points, consumer uptake will also increase.

Matthew Edwards, head of mortality and longevity in Willis Towers Watson’s life insurance practice, has said that why wearable technology presents a fascinating opportunity for insurers, and related sectors such as the private health sector.

Edwards says wearables can allow insurers both to measure risk better, and to position themselves as working in policyholders’ interests regarding their health.

As far as risk measurement goes, wearables could be regarded as the life insurance equivalent of the vehicle telematics and usage-based insurance that is common in motor insurance, providing enormous amounts of information about the insured’s habits.

There is also a very predictive form of segmentation: a policyholder who accepts a telematics device in their car will likely be a materially different risk type from the refusenik.

In the same way, a policyholder interested in a life policy involving the use of a wearable is likely to exhibit contrasting characteristics from other policyholders.

But rather than seeing wearables as a form of measuring device, their use also allows insurers to present themselves more positively to policyholders, as ‘partners’ in each policyholder’s striving for a better lifestyle as well as financial assurance.

Played well, this could represent a great change in the public perception of insurers.

Examples of firms known to be operating along these lines include:

• AXA, where two of its US units (AXA Equitable Life Insurance Co. and MONY Life Insurance Co. of America) boast a Wellness Incentive Benefit Endorsement.
• Under this, policyholders can receive payments on completing specified health activities, such as regular exercise while wearing an approved fitness-tracking device.