Protection  

Apps could monitor clients and dictate premiums

Advances in wearable technology and the increasing amounts of personal information given online could both be used by insurance companies to drive down the cost of protection cover, but comes with certain ethical issues, providers told FTAdviser.

PruProtect were arguably first into this market with their Vitality healthy living initiative that uses customer health and lifestyle data to offer rewards and lower premiums.

Phil Jeynes, head of account development at PruProtect, admitted to FTAdviser that in terms of technology “what we are doing really isn’t that clever” as customers still proactively have to share information.

“We do allow people to buy pedometers to give evidence of them being healthy and we’re also partnering with smartphone apps that record fitness progress,” he added.

The development of smart watches may be the next step forward, as many will be able to monitor real-time changes in biometrics, he added.

“If you speak to the technology experts, they’re talking about this nano technology which will allow people a real-time view of their health, so obviously that would be great for rewarding healthy behaviour, but the flipside is that we’d be able to see the negatives and the moral dilemma that the industry will eventually come up against is how you treat that customer.

“It is great to have the carrot, but at some point you have to use the stick.”

Speaking to FTAdviser, Peter Hamilton, head of retail propositions at Zurich, stated that people’s attitude to sharing data is changing and there is a generation emerging who will come to expect it.

He said: “At the heart there needs to be some kind of bargain – the customer needs to see some tangible personal benefit from providing access to additional data – and this is most likely to be in the form of premium discounts, some additional services, and maybe health related playback of data collected.”

Mr Hamilton stressed customers would need to formally sign up to this kind of information exchange, but added that quicker access to more medical data would mean the overall application process could be significantly enhanced.

“An important issue we need to be alert to is the challenge we pose to the overall notion of insurance – the pooling of risk. With more information, it may well be possible to reduce the cost of cover for the very fit.

“By the same token though, insurance could become more expensive and possibly unobtainable for those who need it most, and there is a separate question as to whether an even greater divergence in price and availability in this way is a socially positive outcome.”

Mr Hamilton added that the role of financial advisers is unlikely to change materially, they have always been there to assess the overall propositions available to customers and make tailored recommendations in the light of personal circumstances.

“This would continue, albeit with some additional factors that might influence that recommendation.”