A few weeks ago we were discussing on this blog the trend of the insurance market to collect very intrusive data.
I had the opportunity to raise my concerns at several conferences and got the impression that people were not aware of what was going on (especially as far as car insurances are concerned). In particular I gave the example of CSS Insurance in Switzerland which proposed customers to wear a fit band capturing activity data in exchange of possible financial rewards (see video below).
We discovered one more example in London and it goes beyond what CSS proposed. Vitality in the UK proposes an Apple Watch for Life Insurance subscribers. Do you understand what it means ? It means that you will be monitored permanently and subject to revision of your annual fees depending on your health conditions. This is a radical shift from the insurance principles we have known for decades (if not for centuries). Like in the CSS examples subscribers are proposed discounts in exchange of physical activity. There is even a table proposed on Vitality’s website that details the benefits depending on the level of physical activity.
Interestingly, the “currency” to determines your reward is one that belongs to the insurance. It’s called an “activity point” and Vitality provides some illustrative and financially appealing examples of how vitality points may lead you to paying nothing. Yes. Nothing. 0£ per month.
The only problem I see is that nobody really controls of this currency is defined and you quickly find out that the business model proposed my Vitality is not sustainable. What is Vitality’s real aim? Improving the activity of its customers and making sure they live a long and healthy life? Imagine what would happen if all subscribers suddenly become addicted to physical activity. They would end up paying nothing. Is this a sustainable business model for an insurance company ? I doubt it. And that’s where controlling the currency becomes an advantage. As soon as customers are hooked and get used to wearing the device (the apple watch here), you can gradually raise the bar and discount the value of this currency to increase your margin.
I let it to your appreciation to judge whether this is an improvement for the consumer or not.Tags: bank and insurance, market research