Fitness products & Health Insurance companies — A match made in heaven
We are lazy beings with an acute weakness for tasty, mostly unhealthy food. We enjoy a sedentary lifestyle, follow an absolute junk of a diet, get stuff delivered at doorsteps and Boom! Suddenly we look like humans from the 'Wall-E' movie - almost immobile, not so agile, an ever-growing waistline and highly vulnerable to lifestyle diseases.
A few sage individuals decided to change this with Fitness bands and Health apps.
The sales of fitness bands and the number of subscribers on Health and Fitness apps have rocketed in the last three years. The digital fitness industry is thriving and is quite literally 'fit" and sustainable.
These products are truly evolving at some pace. From measuring steps to heart rate to sleep duration to offering personalized workouts and diet plans to predicting the occurrence of lifestyle-related diseases through the power of Artificial Intelligence and Machine Learning - they are pretty advanced.
More sales means more people using it, means more data means more fodder for AI/ML implementation and a treasure chest of information for the organization which is the most worried about your current and future health - The Health Insurance Companies.
Note: Will be using the acronym HI for Health Insurance in the rest of the article.
A marriage of Fitness products and HI companies - works?
This relationship can be a truly reciprocal one. Both, fitness products and HI companies can gain rich benefits from it along with the consumers themselves.
1. A Treasure Chest of Information
My periodic medical report clearly states in bold and italic fonts at the end of every test details page that I am pretty fit. Trust me I am not boasting about it. Well, I don’t smoke or drink, follow a strict diet, workout almost six days a week, try to get a total of seven hours of sleep in a maximum of two installments and drink three liters of water. OK. Now maybe I am boasting a bit! The whole point of me giving you a complete account of my health, diet and daily regime is not to envy you but to raise a very pertinent question.
Don’t I deserve a lesser yearly premium and more benefits when I got out and shop for a health insurance? A lesser premium than my best friend of the same age whose daily sugar intake is exactly equal to my monthly intake, who is on a diet just on the last two days of the month desperately waiting for his salary and works out only when the BMI suggests borderline obesity?
But to my utter disappointment, it really isn’t the case. Below are the screenshots of the app of a HI provider. As it can be seen, the policy drafting includes the following key points like the age, gender, any pre-existing diseases and basic medical tests (results of which for me and my friend were almost the same).
As a result, the annual premium and assigned benefits for a particular policy are 'exactly' the same for me and my best friend as at the policy designing stage, the companies don't have the info about an applicant's diet, sleep patterns, fitness and workout regime. Neither do they have any inputs from the AI/ML prediction model suggesting potential future illnesses?
Having this information is critical to define a truly customised policy for each individual, covering exactly the risks the person is carrying and an apt premium.
2. No! It's not 'Anti-Consumer'
The above point may ostensibly appear to be pro-insurer and anti-applicant as lack of good lifestyle and a mere possibility of some disease may result in a higher premium. But look at this way - say based on your current lifestyle and habits, the model predicts that you may become a diabetic in future. If the insurer has this info, the policy plan designed specifically for you could have coverage for all hospitalization costs arising out of diabetes and hypertension along with a wellness program to help you avoid the occurrence of it altogether. If you are frequent smoker, a policy that fully covers conditions caused due to excessive smoking should be apt.
It may a sound a bit blunt and brutal but if you can't change your lifestyle and habits the least you could do is get a customized health insurance policy for yourself.
On the other hand, If the data says you are fit as an apple and should stay the same given that you remain consistent with your routine, it results in a lesser premium.
3. A fair renewal premium calculation
Google this - 'The common problems customers face with health insurance policies'. The results point at one common problem and that is an unjustifiably high renewal premium amount.
It is a pretty standard calculation technique. With age, you tend to get more vulnerable to diseases and thus a higher amount every year. In addition, if you have made a claim in the previous year, the health insurance companies are bound to doubt your health and charge an even higher amount in the coming year.
Well, it does make sense. After all, for such companies premium is the only way they earn money and not increasing it yearly could push them to bankruptcy someday.
But what if these companies knew that you are putting in immense efforts to improve your health and the results too reflect the same? What if they knew that your bad cholesterol levels have in fact dwindled over the course of the last 12 months? What if they knew your sugar levels are well and truly under control?
For HI companies this info is sugary sweet! In such cases, they would happily renew your policy with a premium that is absolutely fair.
4. A steep rise in demand for fitness bands and health apps
According to Vashisht, HealthifyMe, a subscription-based health-app has approximately 1 million monthly active users. Fitbit sold around 6 million wearables worldwide. These numbers are indicative of the fact that the market for digital fitness is strong and the industry could see an exponential rise in demand if these products are able to serve the dual purpose of not just keeping you fit but also giving you a more comprehensive and affordable health insurance.
A Few Challenges
1. User Privacy
Data and privacy go hand in hand. A protocol should be defined by the regulatory authority of a particular country/region to ensure that the user data is not exploited or used in a fallacious manner. Privacy is paramount in implementing this merger. Any undeclared sharing of data between the fitness and HI companies should be punishable under law. Sharing of every KB of data should be first permitted by the user.
2. Reliability on the data
The inferences made by the AI/ML engines may not be completely reliable and can also raise false alerts. A lot depends on the robustness and efficiency of the system in place.
Also, the purity of data is questionable. On many occasions, fitness bands and apps detect incorrect movements like counting steps while sitting the bus. It may also happen that the user does not wear the fitness band day long missing out on crucial information being tracked.
If the premium is dependent on the data from these products, there are chances that the same band would be used by other members in the family to record more steps or a better workout regime.
Thus, completely relying on the data from these products can land HI companies in trouble. The solution to this problem can be a more efficient AI/ML system and a robust tracking and user tagging mechanism.
3. Financial viability for HI companies
Say, for example, the insurer studies your data and designs a policy that covers diabetic care as the data points at it. There are chances that you may start making big claims just 3 years into the policy which would result in heavy losses to the insurer.
This can be tackled by pushing the user to get fit and motivating him/her to follow strict workout regimes and diet. In case he/she fails to do so, an increase in premium is the only option left.
Also, if the data suggests the user could develop the disease soon, say in the next 5 years, policy drafting can be done accordingly.
The plan may sound very futuristic but the insurance sector, especially HI has a huge potential to make an effective use of data from the fitness products. Till that happens, get your running shoes on else pay a higher premium! Thanks for reading. Image credits — Nikita Golubev , xnimrodx, phatplus, Eucalyp, Flat Icons, Smashicons, Freepik & icongeek26
