Wearable Data in Insurance: Ready for Mortality & Morbidity Risk?
In today’s fast-evolving world of health technology, wearables like fitness trackers, smartwatches, and health apps are more than just tools for personal health monitoring. They are rapidly becoming integral in the realm of insurance underwriting, offering valuable real-time data that could help assess individual mortality and morbidity risk. But is the insurance industry ready to fully embrace this data to enhance risk models?
The Rise of Wearables in Health Tracking
Wearables like Fitbit, Apple Watch, Garmin, Oura, and WHOOP have revolutionized personal health tracking by collecting real-time data on heart rate, sleep patterns, activity levels, stress, and recovery. This data is being used for everything from fitness goals to chronic disease management. However, its potential in the insurance industry is still relatively untapped, especially when it comes to accurately assessing an individual’s long-term health risks.
The key to integrating wearable data into insurance underwriting lies in the ability to use it to create a more holistic view of a policyholder’s health and habits. With the vast quantities of data these devices collect, insurers can gain a more dynamic picture of a person’s risk profile than traditional methods alone.
Wearables and Their Potential Impact on Mortality and Morbidity Risk
What is Mortality and Morbidity Risk?
Mortality risk refers to the likelihood that a person will die within a certain period, typically assessed over the policyholder's lifetime.
Morbidity risk, on the other hand, focuses on the probability of the policyholder developing health conditions that can affect their quality of life, often leading to long-term medical care, lost income, or even disability.
Traditionally, mortality and morbidity risk are calculated using historical data, such as medical records, lifestyle factors (smoking, alcohol use, etc.), and family history. However, this data can be incomplete or outdated.
Wearables provide real-time data that reflects a person’s current health, lifestyle choices, and overall well-being. By tracking vital health metrics like sleep quality, physical activity levels, and heart rate variability, insurers could have a much clearer picture of a policyholder’s risk factors.
How Wearable Data Can Improve Risk Assessment
Wearables can provide a more dynamic, real-time, and individualized view of risk that traditional underwriting methods can't capture. Here's how:
Early Detection of Health Issues
Wearables can monitor signs of early-onset health conditions, such as irregular heartbeats, abnormal sleep patterns, or insufficient physical activity, which may signal a higher morbidity risk. Real-time monitoring enables insurers to detect these risks early, before they turn into serious health problems.Real-Time Activity Tracking
By tracking activity levels, caloric burn, and exercise frequency, wearables provide a continuous snapshot of an individual’s lifestyle choices, which are key factors in predicting mortality and morbidity. Increased physical activity and better sleep correlate with lower risks of heart disease, stroke, and other chronic illnesses.Stress and Recovery Monitoring
Wearables that track stress levels and recovery provide insights into mental health, which is an increasingly important component of both morbidity and mortality risk. Chronic stress can lead to serious conditions like heart disease, hypertension, and even cancer. By monitoring recovery and stress over time, insurers could identify individuals at higher risk earlier in their health journey.Health Trends Over Time
Unlike static assessments based on historical data, wearables offer continuous, real-time tracking of health trends. Insurers could use this data to evaluate risk patterns over months or years, offering a more accurate view of a person’s health trajectory.
Challenges in Integrating Wearable Data into Underwriting
While the potential benefits of wearable data for underwriting are clear, there are several challenges that need to be addressed:
Data Privacy and Security
Insurance companies will need to navigate the complexities of data privacy laws and security regulations. Policies around data ownership, informed consent, and how wearable data is shared will need to be established to comply with regulations like HIPAA in the U.S. or GDPR in Europe.Standardization of Data
One of the biggest hurdles in using wearable data for underwriting is the lack of standardization. Different devices and apps use different formats for data, making it difficult to compare and integrate data effectively. Companies like ROOK are working to provide a unified API to normalize and standardize data across wearables, but broad industry adoption will be key.Consumer Adoption and Trust
Many consumers are still hesitant to share their personal health data with insurers. For wearables to be fully integrated into underwriting, trust must be built between consumers and insurance providers. Clear communication on how the data will be used, stored, and protected is essential.Regulatory Hurdles
Regulatory frameworks around the use of wearable data in insurance are still developing. Insurance regulators will need to establish clear guidelines for how wearable data can be used in underwriting decisions, ensuring fairness and transparency for consumers.
The Future of Wearables in Insurance Underwriting
The integration of wearable data into insurance underwriting represents a paradigm shift in the industry. It has the potential to offer more accurate, dynamic, and individualized risk assessments, leading to better pricing, fewer claims, and more tailored policies for consumers.
As wearables continue to improve and become more prevalent, insurance companies that embrace this technology early will have a competitive advantage. However, for this shift to happen, the industry must work together to address data standardization, privacy concerns, and consumer trust.
The future of insurance underwriting is in real-time health data—and wearables are leading the way.
Conclusion: While the potential for wearable data to transform insurance underwriting is immense, there are still significant obstacles to overcome. If the industry can tackle data privacy, standardization, and consumer adoption, wearable data could become a key tool in building more accurate and personalized insurance models.
