Insurance Networking News: As a leader in life and health insurance for Swiss Re, what excites you the most about wearables?
Neil Sprackling: This has the potential to be a mini revolution when it comes to the way we underwrite for life insurance risk. We as an organization and other companies are looking very actively at this. There are lots of organizations that are collecting data for purposes that have nothing to do with insurance per se, but they all have to do with improving the lifestyle and health of individuals. That can be used in a positive way to help people insure themselves more appropriately and more efficiently. I've worked in this industry 30 years. In terms of risk selection, this is the potentially biggest change that I've seen in my career. If you were talking to Swiss Re's chief underwriter, he would agree to that view as well. The way that people have to apply for life insurance is not the most consumer friendly experience. This would really, really change it.
INN: How can wearables help improve the insurance customer experience?NS: One of the unique characteristics of the U.S. life industry is that we underwrite to a level of granularity that basically doesn't exist in any other country. You're taken through a pretty complicated and relatively long process of providing medical information and then undergo a number of medical tests to prove your status. When we try to access the consumer, who's got this big level of under-insurance, it can be a relatively unattractive proposition to complete a three-page medical document and have a bunch of tests. Then it takes a few weeks to tell them the results.But there are now devices that will measure your heart rate, blood pressure, oxygen intake, and temperature. If you've got someone who's wearing a device that's monitoring their blood glucose, for example, and you can use that in the context of insurance assessment, in theory we ought to be able to offer better terms for life insurance.
INN: Why is it so crucial for insurers to be on top of this?
NS: In the United States, the average family is under-insured to the tune of about $400,000 each. The types of people wearing these devices are the consumers of the future. A lot of those people are either typical targets for life insurance or will be in the next five to 10 years. But people don't want to go through the typical process as they've done for the last 30 years.
INN: So, the technology will make them want to buy more insurance? Or it makes the opportunities more obvious to the insurer after they've collected the data? Or both?
NS: Indirectly, it should help. The industry is trying to do is engage more effectively with the end consumer. One of the challenges to that is the process to assess risk. If you've got a groundswell of people who are actively engaging with these wearable devices, through which health information is being provided willingly, there is a much more efficient, more customer-friendly way of allowing people to assess risk. I'm not suggesting that wearing a wearable device immediately makes you think of life insurance. However, the way that that health information is shared with a number of different organizations allows for the awareness to be much greater.
INN: What's the timetable for this to be implemented on a large scale by insurers?
NS: It's nearer to two years off than it is five or seven. We have a group of people working in our London and Zurich operations that are focused on exactly this. We collect information that a consumer provides in an application form and send them off for medical exams, and we analyze the results. And we have someone looking at the data that's being collected by FitBit and others, and then discussing it with our data team and the group that actually prices our business to work out how can we use that data to correlate alongside information that we would typically use to price an insurance risk and offer underwriting terms.
Swiss Re ran a campaign for global staff with Fitbit devices. The engagement was just extraordinary. We had a very large proportion who took part in a global competition to see who could do as many steps as possible over a six-week period. And, of course, everyone's uploading that data and it's going into the broader database that Fitbit holds. I genuinely believe that technology leads to better ultimate consumer experience.
INN: Does this all tie back to the revolution in big data and analytics across the insurance industry?
NS: It does. Swiss Re has one of its global strategic initiatives around big data, and that's not just in life insurance -- it's across all lines of insurance we write. The purposes of that is, to go back to organizations that hold large amounts of customer data and work out how that can be used appropriately, and with relevant consent, to allow us to improve the level of cover that anyone has, whether it's life insurance or otherwise. It's more than wearables. You could say over-arching this is big data and technology, and you bring the two together. The work that's being done to work out how to take that kind of more publicly available data and use it to avoid having to ask a consumer a bunch of questions is exactly what we're doing here.
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