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How Wearable Technology Can Impact Insurance

As long as I can remember, I’ve been a gadget guy.  Those of us who grew up in the 60s and 70s were among the first generation to have a television in the living room.  During the 80s and 90s, my kids were in the first generation to grow up with a desktop PC in the living room, and early cell phones and iPods in their pockets.

As they left home for college in the late 90's and 2000s, they were the first generation to have laptops and netbooks in their dorm rooms, while I began using Personal Digital Assistants (PDAs) and email-enabled devices like those from Palm and Blackberry at work.  Now in the 2010s, I was one of the first to order an iPad, Kindle Fire, and Android tablet, along with a succession of various mobile smartphones.

In May 2012, I ordered a Pebble smartwatch on the crowd funding website Kickstarter, where it raised over $10 million from an initial goal of $100,000.  I received my device in February 2013 and Pebble recently improved the functionality through a firmware update and a new watch app store.

In mid-2013, Google introduced Glass device and the Glass Explorer program.  I signed up as soon as the program opened, but eventually decided not to take the plunge—the device currently costs $1,500 but is expected to cost much less once in general production later this year.

Last June, I ordered a Fitbit Flex fitness band then in November replaced it with the Fitbit Force, the upgraded device with OLED display.  Sadly, I was among the first to develop the allergic reaction that led to the voluntary recall of the Force.  Being an early adopter of new technology has its downside.

2014 promises to be the year of wearable technology.  Google recently announced Android Wear, an extension to Android aimed at wearable devices. Several manufacturers are planning to introduce wearable products, hoping for the same success Pebble found initially in the smartwatch market. 

Companies are also developing wearable devices for the healthcare market, where they meet the need of continuous monitoring while allowing patients to be mobile and active.  With the coming wave of wearable devices, the question is:  what kind of impact can they have on the insurance industry?

Wearables and Insurance

Wearable devices have key capabilities that potentially lead to interesting applications for insurance professionals:

  1. Wearables capture information about the wearer's surroundings - example:  Google Glass.  Glass is able to capture high resolution images and video, leaving hands free to take notes, which could be useful for capturing claims information in the field.   National ConnectForce Claims is evaluating the use of Glass to provide real-time feedback from field adjusters to claims systems for evaluation in the office.  
  2. Wearables record movement patterns of the wearer. For example:  Fitbit Flex.  Fitness tracking bands like those from Fitbit, Nike, and Jawbone record the wearer's motion and are designed to be worn 24x7.  Software then analyzes the number of steps, active vs passive activity, and restlessness during sleep.  A startup called Walkmore proposes to monitor movement, analyze it along with other "big data" and provide feedback to financial institutions to determine loan risk.  While their approach currently uses a smartphone app, it could be extended to use information provided by a wearable device and to assess insurance risk factors.
  3. Wearables can provide feedback to the wearer. For example:  Pebble.
  4. Smartwatches can leverage the information-gathering capability of the smartphone to provide notifications to the user when holding the phone is not safe, such as when driving.  Fitness tracking bands can provide wearers with feedback as indicators of a healthy lifestyle. Walgreens and others have developed programs aimed at providing rewards by earning points for steps taken.  Similar programs could be introduced by health insurers as part of wellness programs.

Wearables and You

Smart eyewear, fitness tracking bands, and smartwatches will continue to evolve this year, and new applications will be introduced, including apps from financial services companies.  Fidelity released a Pebble smartwatch app for the recent launch of Pebble’s app store.

My recommendation is to purchase or borrow a wearable and use it for a few weeks.  Learn not only what capabilities the device offers, but also what changes it can make in your lifestyle. Think about how the information it gathers or provides could be used for assessing or avoiding insurance risk.  Dream up the next application that will disrupt the insurance industry. If you do, let me know. I know a gadget guy who might be interested in trying it out.

Tom Benton is a principal in the insurance practice at Novarica with expertise in IT strategy, business process reengineering, core systems implementation, and project management, primarily for life and annuities. Prior to joining Novarica, he served as VP, Technology and Systems at Navy Mutual. He holds a BS degree from Cornell University and a MS degree from MIT and he can be reached at

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