Wearable fitness trackers could affect your insurance

Wearable medical devices such as the Fitbit are making increasing inroads into all aspects of life. Corporate wellness programs are embracing them as a way to encourage activity. In some cases, incentives may be provided to employees who meet certain activity and other health targets.
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Insurance companies are also getting more interested in collecting biometric data from customers via wearable medical devices and other forms of monitoring. For example, John Hancock now offers "interactive" life insurance policies, under which customers can submit to optional fitness and activity tracking via wearable devices and smartphones.

Their reasoning:

• They can set a more accurate price on premiums.
• They can avoid overcharging those with healthy habits who are at lower risk of a variety of medical conditions.
• They can provide an incentive to existing policyholders to improve their health habits - lowering claim expenses for all policyholders in the risk pool.

Tracking is optional, but policyholders who participate, and who meet activity objectives as recorded on their devices, receive discounts on their insurance premiums. They also receive gift cards from participating merchants and other perks if they log their workouts via a mobile device app.

John Hancock announced this fall that all their future life insurance policies would feature this option.

Other insurers are not far behind: In addition to life insurance companies like John Hancock, medical, disability insurance and long-term care insurance carriers are all looking into leveraging this tech to control costs and inform pricing.

For example, Humana, a nationwide health insurance carrier, has launched the Go365 program that pays policyholders to complete verified workouts via the Medicare Silver Sneakers program, or by wearing an activity tracker.

United Healthcare's Motion program, marketed to employers who want to decrease their own health care expenditures, issues free trackers to employees and allows them to earn up to $4 per day in health reimbursement account contributions.

Even car insurers are getting into the act: Progressive allows customers with good driving habits to earn discounts by tracking their driving using a mobile app called Snapshot. On the other hand, those with poor or risky driving habits as documented by the app may see their premiums increased when their policy is renewed.

Potential downsides
But, the practice raises some important disadvantages and policy issues:

• Non-participants will need to pay proportionately higher premiums, since healthier policyholders who receive discounts won't be contributing as much to the risk pool.
• Privacy and consumer advocates have also raised concerns that insurers could potentially use the data to drop less profitable customers.
• They also raise concerns that this data could be hacked or otherwise leaked or sold to third parties for a variety of marketing purposes to which the policy holders never consented.

The practice is still in its early stages. Insurers, regulators and legislators are looking carefully at how to balance the sometimes competing priorities of affordability, efficiency, privacy and the accessibility of insurance. And industry analysts are concerned that some customers may engage in fraud by having someone else use their Fitbits.
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Should you participate? That's a personal decision. You will have to decide for yourself whether the discounts and perks outweigh your privacy and security concerns.