Why are insurance companies offering free or discounted fitness trackers and wearables?
Because it encourages customers to upload fitness stats and data proving they’re in good health and exercising regularly. Many insurance companies see this as a way to incentivize healthy living.
After all, insurance companies make more money if you remain healthy and stay that way. It makes sense.
A recent survey — conducted by a firm called Accenture — revealed that 63% of insurance executives believe wearables will have a ‘significant impact’ on the industry over the next few years. Many companies have already begun incorporating fitness tracking data into their policies.
For instance, some companies consider the tracked info complimentary and offer rate discounts, incentives and rewards for keeping a proper exercise schedule. Other companies, on the other hand, penalize customers who do not live an active lifestyle — hiking up prices for those who choose not to report fitness data. That last statement isn’t an exaggeration either, the insurance company my wife and I go through will penalize us and raise prices if we don’t report an active lifestyle. Whether or not we feel that’s fair is beside the point, it happens regardless.
It begs the question: What happens if the fitness data you share influences a company’s decision to insure you? Worse yet, what are they doing with the data they collect and are they truly respecting your privacy? What if something happens — like an injury — where you cannot report data for a period of time?
To be honest, I could probably list a few more questions on the topic but I’d rather not get out of hand.
Do Insurance Companies Really Do This?
The short answer is yes.
Humana has generated an entire system based on healthy living for their customers called Vitality. It encourages customers to earn points by ensuring they remain in good health. Customers can earn points by reporting exercise routines and schedules through fitness data, getting Vitality checkups, routine physicals and more.
Insurance company John Hancock actually offers a Fitbit to customers, allowing them to earn discounts up to 15% off their premiums for reaching various activity goals. There are providers that offer similar options like Oscar Insurance, Blue Cross Blue Shield, and many others.
Whether the reported data hurts you or helps you depends on the company.
How Safe Is Your Data?
There’s no easy way to say this, so I’ll just come out with it. If you are sharing your data — with anyone — then it’s not safe. That does not necessarily mean the data you share is going to be used to hurt you, a la identity theft. It simply means the only way to be sure your personal data is secure is to keep it private.
It’s up to you whether or not you feel it’s worth the risk to participate in these types of fitness tracking and active lifestyle programs.
If a company has your data and is collecting it, there is a chance that they will sell it to a third party. In fact, a lot of companies do this already. You’d be surprised how many portals out there collect your information like your email, home address, or telephone number and then sell it off to another marketing firm. It happens all the time.
When it comes to your fitness data, they may not necessarily reveal extremely personal information like your name and whereabouts. However, they may actually be sharing demographic stats like your age, how often you exercise and what common health issues you are suffering from.
For example, Bounts — a company that specializes in incentivized fitness tracking — allows customers to share their data and earn rewards for it.
Bounts founder, John Stuart says that members have control over who they share data with. “We do leverage the data we hold, but it is the aggregate, non-personal data e.g. Males, between 30 years old and 40 etc,” he says.
“Each of the trackers we work with shows their members who they are sharing data with and the extent of that data share. If they don’t want to do it anymore, they can disconnect.”
You can’t say the same of your insurance company, as there’s no way to know who they are sharing your data with.
How Can Bad Data Affect You?
Most smartwatches and wearables are equipped with a heart-rate sensor. What happens if the sensor or technology in question somehow identifies an abnormality in your heartbeat? Can insurance companies refuse to cover you?
While I could never say with complete certainty I know how insurance companies will use this data, it’s unlikely that a company will drop you for reporting information. We have yet to see an incident where fitness data causes customers to lose their provider(s).
For the most part, fitness tracking and the reporting of said data is voluntary.
Keep in mind, these devices will eventually evolve to become more efficient at tracking information. Pretty soon we may be able to accurately report information like cholesterol, stress levels, BMI, blood sugar and much more. Sure, insurance companies can always collect this information from your doctor after a visit but it’s different when you’re tracking the information in real-time. It’s a scary prospect that we don’t quite understand the implications of yet.
The same could be said of fitness tracking data like calories burned, steps taken, distance traveled and more.
Will these insurance companies eventually start to penalize us for not traveling or walking far enough daily? It’s difficult to say.
It also brings into question the idea of real-time rate changes. Most insurance premiums change about once a year. If your health and fitness data is being tracked on a daily basis, is there a chance that these rates could change daily to reflect your health? Imagine missing a day of exercise because you didn’t feel good and watching your rates go up.
The truth is, we don’t know how these companies are going to handle this data years from now. Who knows, by 2020 fitness reporting may be mandatory across all insurance companies.
Should You Participate or Not?
If you’re lucky enough to be subscribed to a company that offers discounts and rewards for tracking your fitness data, then by all means take advantage of that opportunity. Just be aware of what sharing your data means and how that could potentially affect you now and in the future.
If you’re concerned with how that data may used, shared or stored — remotely or otherwise — then it’s probably best to stay away from these programs altogether. In some case, that might mean your insurance premiums will increase. In the case of my wife and I, if we stop reporting data our rates will increase. You’ll have to assess that risk on a more personal basis.