Leveraging activity to personalize insurance

03 October 2016 Gareth Friedlander, Discovery Life

Big data is a term that is bandied around nonchalantly. It is often perceived as an all-encompassing term that allows a company to gain a competitive advantage.

However, while having large amounts of data is great, big data is only really useful to an insurer when it is actionable, behaviour-changing, granular and available in real-time.

Insurers that use big data to generate significant value for all stakeholders – their policyholders or members, the insurer, society and financial advisers – are those that will gain the advantage.

Reward behaviour

Insurers are doing this through programmes that specifically drive habit formation by incorporating personalised goals, immediate rewards and a policyholder’s social interactions to increase physical activity.

Technology such as activity tracking wearables can provide a seamless and engaging experience for the person. Great promise is seen by insurers who have rolled out such programmes, with a marked increase in levels of physical activity and gym visits where immediate rewards are given to incentivise policyholders.

Deeper analysis of their available data also demonstrates how such programmes contribute to positive behaviour change.

Activity tracking as an enabler

Activity tracking wearables and real time data – for both the policyholder and insurer – also significantly increases the connectedness between the two parties.

This connectivity enables shared value insurance where all parties to a life insurance contract benefit from the improved health and wellbeing of policyholders.

Data demonstrates that increased physical activity is correlated with increased engagement in other healthy lifestyle behaviours, having a multiplying effect on health and a reduction in their policyholders’ mortality rates – leading to significant risk savings.

These risk savings are then passed on to their policyholders in the form of cash paybacks and cash conversions.

These insights further provide a clear illustration of why actionable, real time data is so useful, and why insurers should be leveraging activity tracking and other similar technology. It represents a key theme for the life insurance industry going forward as it allows insurers to design and price their products more accurately. This is a sentiment shared by many leading executives in the global insurance industry.

Better understanding enables better advice

This real time actionable data is not only beneficial from a product design and pricing perspective, but has also become an important business and service enabler for financial advisers.

The changing nature of the financial adviser landscape, with the ever-increasing importance of treating customers fairly and the looming Retail Distribution Review necessitates absolute certainty in the quality of advice and products offered.

Having a better understanding of the risks a client faces from a holistic point of view enables the financial adviser to give better, more accurate, real time advice that moves away from the traditional static approach to take account of the client’s individual behaviour and needs.

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