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April 22, 2021

The pace of digital adoption in recent times has made gadgets and wearables commonplace. It has also greatly assisted the wellness programs both in letter and spirit. Individual awareness and participation in wellness has especially gained momentum since the onset of the COVID-19 pandemic.

The extensive use of monitoring devices in day-to-day life not only help identify healthy individuals but also influence their lifestyles for the better. The trend has taken root and has the potential to grow quickly. As new business models and players emerge, offering wellness-related programs, insurance companies have moved to utilize these eco-systems to offer better plans and products.

Eyeing the Wellness Opportunity

It has been observed that even a small health setback for an individual can motivate embrace of a wellness program or a schedule offered by third parties or the employers. It could start with an initial health assessment followed by periodic reviews and later sustained by incentives directly from the insurers. This is where the policy holders or participants of group plans could feel motivated to increase their participation in the wellness challenges thrown open from time to time.

Additionally, backed by opulent new data and research, the insurers are better placed to tap into the opportunity by creating more futuristic insurance plans for individuals and participants. The idea has been strengthened by research over the past years establishing that the genes of identical twins can change or be activated or deactivated differently without altering the underlying DNA sequence. Further, environment, geography, nutrition, exercise, and other individual sustained wellness-laden choices can influence the expression of the genetic codes. This has been proven by an emerging science - epigenetic testing. This was also one of the main reasons insurance regulators prohibited the use of genetic information such as sickle cell analysis or genetic traits when creating plans as it became clear the opportunities for insurance need not be limited to circumstances of birth.

Securing the Future

Members of wellness insurance programs have been allowing information sharing through wearables. This has enabled faster and easier standard underwriting of policies. In fact, a large number of people are willing to share the information about their daily vitals for various purposes including rewards. This treasure trove of information has the potential to help underwriters better assess the true risks to individuals with granular differentiation, not only for product and price personalization but also to store crucial data for future generations. Additionally, family history and parental lifestyle is a crucial factor in assessing risk for individuals. Capturing and studying the vast data pool can help not only analyze the lifestyle patterns and the existing state of wellbeing but also make it possible to offer customized products and plans going forward.

These insurance business models can evolve very quickly with technological and medical assistance. In addition, they can help predict emergency situations well in advance and save lives with timely actions. For instance, given the pace of development, going forward, predictive technology will potentially be able to help an individual about to experience a cardiac arrest while driving a car. A combination of IoT and medical technology will likely help immediately transfer them to an ambulance and ensure timely care.

Peeking Behind the Curtain

The business insurance models of the future are set to evolve to entail:

  • The emergence of a network of market players with new offerings and products contributing to the growing eco-system of wellness.
  • Insurance advisors turn into wellness evangelists/advisors. Compensation for them could be designed based on the quality of wellness engagements, programs managed and health outcomes rather than mere premiums or contributions. They truly become health and lifestyle influencers.
  • New communities managed by wellness enterprises could emerge, employing guardians and caretakers to monitor physical activity records for the members.

Insurance carriers are slowly graduating from Straight through Processing, automated underwriting or accelerated underwriting to continuous underwriting and real time underwing, paving the way for Pay as You Live models. In addition, there is a consistent shift towards influencing a behavioral change with regards to the lifestyles for a group of individuals rather than utilizing the data from the existing behavioral lifestyles. The gadgets, fitness wearables, hearables and nearables could be optimized to enforce this change.

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Vinay Kumar Patri is a Senior Business Consultant with TCS Banking and Financial Services unit and has over 15 years of experience in Insurance Industry and over 13 years of IT experience in the Life Annuity, Group Benefits, Retirement, Personal and Commercial Insurance. Patri holds a Master’s degree in Commerce and is a Fellow of Insurance Institute of India.

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