The growing use of lifestyle apps that track health and fitness, and in particular the proliferation of data these produce, is providing insurers with new opportunities to personalise life and health protection to individual policyholders.

The availability of digital data around a person’s health also means that it may be easier for a customer to get the protection they need by dealing directly with an insurer, without the need to visit a medical professional – an important development as we continue to deal with the impact of Covid-19 lockdown measures.

However, there are important considerations around the credibility, security and use of personal data that the insurance industry rightly needs to address to reassure the public.

Typically, life and health insurers have assessed mortality risk based on very clinical data sets, such as a person’s weight, height and blood pressure, and translated this into prices for insurance premiums.

While these metrics are good indicators of our health, so too are people’s personal lifestyle choices, such as how much physical activity they do, how much sleep they get or mental wellbeing. These lifestyle factors are particularly important with regards to heart health, which is a key factor used in assessing and underwriting risk and determining insurance premiums.

By incorporating broader metrics (or risk factors), we believe insurers can see a far more complete picture of an individual’s health, allowing an important step forward in personalising life and health insurance protection.

The availability of this data is creating the opportunity for a significant change in the way that insurers underwrite risk

So, how do we capture this data?

Because of the increased use of wearables, smart phones and lifestyle apps, there is now a huge wealth of available data tracking people’s personal lifestyle choices and behaviours. There are apps that track sleep, nutrition and exercise, all the way through to those that can help people manage chronic diseases such as diabetes.

The availability of this data is creating the opportunity for a significant change in the way that insurers underwrite risk, not only taking into account clinical data, but also those lifestyle factors that people participate in every day.

We believe there are six key lifestyle metrics to consider when assessing risk. We call them ‘The Big Six Lifestyle Factors’: sleep, nutrition, physical activity, mental wellbeing, substance use and environment. These factors allow insurers to better recognise the holistic nature of an individual; not just their ‘point in time’ health, but how their health is changing dynamically every day, based on the actions and activities they undertake.

In order to use this data to assess risk and ultimately to price products, the insurance industry needs to satisfy regulatory scrutiny

Insurers can understand and map the impacts of lifestyle factors on health and mortality risk, as well as how individuals are managing their health on a daily basis. This means insurers can reward people for taking those actions that build individual resilience and help them live the longest and healthiest life that they can.

Why now?

While many people have had wearables or tracking devices for a while, the use of lifestyle apps has increased in recent years, with many people using a step counter or a nutrition app, with others using even more sophisticated biomarker tracking devices to manage their medical conditions.

But the credibility and reliability of this data is vital. In order to use this data to assess risk and ultimately to price products, the insurance industry needs to satisfy regulatory scrutiny. This means that the data we collect and the correlations we draw between that information and a person’s health to calculate their insurance premium must be dependable.

We are confident that that necessary level of credibility has been reached. This provides insurers with a more sophisticated understanding by which to base an individual’s premiums on their activity.

These developments also allow insurers to provide a better customer journey by completing the application and underwriting process with perhaps fewer customers needing physically go to the doctor. The ability to complete the processes remotely has shown to be particularly important over the last few months of the coronavirus pandemic.

But for this new approach to work and be trusted, people also need to be confident that their data is going to be used in the right way. That means that both the app and the insurance providers must be clear and transparent about exactly how the data will be used and analysed, and of course individuals need to give permission for their data to be used. The value of this personalised approach needs to be clear to the consumer and they need to know their data is secure.

That being said, we are already seeing customers starting to demand this level of personalisation and individuality from their insurance providers. People know they are more than just a combination of clinical factors and they want to be recognised for the positive actions they’re taking towards their health and for this to be reflected in the protection they get and the premiums they pay. That's why we are embedding the findings from our research around lifestyle factors directly into our own underwriting models and our flagship underwriting guide, Life Guide.

The use of personal data to individually tailor life and health protection is vital if the insurance industry is going to build products that can support the evolving needs of people who are increasingly seeking dynamic, personalised protection solutions.