I’ve had the same car insurance agent for over 20 years. About five years ago, I called to let him know I had purchased a new vehicle. During the call, he tried to convince me to sign up for a new feature: a device that plugged into the vehicle’s diagnostic port to track my driving patterns.
The device assigns you a “performance rating” based on your driving habits. If you drive “safely,” your premium declines. But if you drive too fast, brake too abruptly, or drive at the wrong time of day (late at night), your premium increases.
I declined his offer, because I didn’t think much of the idea of it tracking every mile I drove.
Fast forward to 2021. Monitoring your driving habits is just the beginning. Life and health insurance companies want to know what you’re doing 24 hours per day, too. And they’re making the same offer: let us track you, and you’ll save money on premiums. This is possible with wearable devices like Fitbit that monitor your heart rate, your sleep patterns, and your food intake.
Brooks Tingle, the CEO of John Hancock, explains the value proposition of wearables for life insurance companies and their customers:
People live longer, we make more money … We take a huge percentage of that value that’s created and offer it back to the customers for participating, and that comes in a couple forms: substantial premium discounts, up to 25% off their annual life insurance premium for engaging in the program, significant discounts from a range of retailers. Our customers can enjoy 25% off healthy food purchases at over 17,000 grocery stores nationwide. Our most engaged customers can earn a free subscription to Amazon Prime.
John Hancock’s “Vitality” program gamifies the entire process, a popular innovation with younger customers. For every 10 workouts you complete, you get one spin of the “Vitality Wheel.” According to Tingle:
You get a message saying you’ve earned it, now spin it, and you go to your mobile device and there’s a wheel, looks sort of like the Wheel of Fortune or something, and you spin it, and frankly, the rewards are modest. I mean, you might get $5 at Starbucks, $10 at Amazon, but the most consistently positive feedback we get from customers isn’t, “Oh, I saved $1,000 on my premium, that’s great,” or “I saved $600 over the course of the year at the grocery store,” it’s, “I love that wheel.”
Perhaps in the near future, your life insurance company will give you an additional spin of the wheel when you upload proof of your second COVID shot to your smartphone. After all, there’s already a wearable to alert you when you’ve consumed too much booze and another one that tracks you having sex and then passes on suggestions on how to better please your partner.
But in most cases, you don’t own the data these apps collect. And they can be used against you. For instance, if you opt in to having your car insurance company track your driving habits in exchange for a discount, you might not have noticed language like this:
Data may be disclosed to third parties… and used in an accident investigation… You should not expect to retain any privacy or confidentiality related to your use of the application.
To be clear, we’re not criticizing insurance companies for making these innovations available. They’re in business to generate profits for their shareholders. And the business model is to collect as much premium revenue as possible while paying out as little of it as possible in claims.
But that doesn’t mean you need to opt in. At least not so long as you still have a choice not to.