Smart Phone Underwrites Life

2015 was arguably the year of the wearable. Many tech pundits have reflected that given the onslaught of new devices — and places to wear them — the year belonged to smartwatches and fitness trackers.

But we’ve only scratched the surface, and the devices remain stuck conceptually as a ’nice to have’ as opposed to a real game changer. But not for long. If 2015 was the year of the wearable then 2016 will be the year the wearable comes of age, with several initiatives already pointing towards a more mature, more connected market.

I’ve been trialling MLC’s Basis Peak smartwatch, which the insurer is offering in conjunction with its ‘On Track’ program to help customers save on their life insurance if they get enough exercise and sleep. The device, available now, is on offer voluntarily to customers purchasing an MLC Insurance or MLC Insurance Super policy.

The thing is a bit clunky, and only offers a black and white screen. It’s definitely not sexy. But on a deeper level it’s exciting.

MLC chief underwriter Fiona Guscott tells me the wearable would change the whole underwriting process for both her company and prospective customers. Currently, anyone interested in taking out life insurance has to fill out a 30-40 page questionnaire on their health, with only the opportunity to talk about the negative aspects of their medical history and lifestyle.

“Now we’ll be able to see from the smartwatch if they’re exercising well and sleeping well,” she says. “We can see that and reward them for that with the discount. That's the first thing, it's a really different way of getting useful information from our customers.”

It’s more accurate, too. I could write anything on that 40 page questionnaire to be honest, and MLC would have to take my word for it. The paper-based process means a majority of life insurance customers are charged standard premium rates, even though as individuals our lifestyles vary greatly. This way, if I live more healthily I’m rewarded for it.

The way the device works is it’s set up to accumulate a certain amount of points each day, based on the number of steps users achieve, the number of active minutes they spend throughout the day, the hours they sleep and resting hertrate. You get a certain number of points for each of those activities, with a maximum score of 10 points each day. The target score is 900, so an optimal user would achieve that in 90 days if they hit 10 points every data.

Guscott says MLC allows 160 days to reach the target score, so a user would have to score 10 points 4 out of 7 days a week to achieve that target.

If they achieve their targets, users save a 10 per cent on their premium for life.

I only wore the watch for a few days (the Apple Watch is still king, and wearing two just isn’t feasible) but my consciousness around the sleep I was getting and the activities I was doing was raised pretty significantly. Given it’s a bit clunky it does take a bit of used to wearing it to bed, and it doesn’t receive my texts like my other watch, but the watch seems pretty comprehensive when it comes to monitoring my overall health metrics.

Aside from the life insurance savings and health benefits, there are definitely some pluses to the hardware itself. It has a four day battery life — far better than most competing products — and it doesn’t need to be connected to your smartphone to track your activities. Its heart rate monitoring from my testing is also extremely accurate, in a way that other smartwatches definitely aren’t.

And this is just the first step, Guscott says, adding there may be a chance of MLC’s program rolling out more broadly to devices like the Apple Watch and to other fitness trackers.

“Third party apps is definitely something we’ll look at down the track, and this particular smartwatch will be superseded by some other technology down the track, of course. You’d want a program like this to be device agnostic.”

2016 will likely be the year insurance firms, and other sectors too, catch on to the unique proposition offered by wearables. Businesses will know their customers better, and those customers in turn will either save money or get a much more personalised service, or both. At this stage, that seems like a win-win.