Telematics Insurance was marketed as a revolution in car insurance for the under-25s when Aviva first introduced the motor insurance policy in 2005. By agreeing to a GPS-tracked' Black Box' in their vehicle, young drivers could enjoy dramatically reduced premiums by proving they were safe and responsible on the road.
Although market penetration was predominantly in the under-25 market, the installation of the tracking systems did positively impact the insurance companies with a reduction in claims whilst also reducing accidents and speeding offences. Adding these little 'Black Boxes' offered the desired effect the insurance companies hoped for.
The psychology behind this new technology in the sector – drivers having a sense of being monitored and considering their actions to ensure they were not penalised with higher premiums - allowed a fairer insurance system for the driver whilst improving the bottom line of insurance underwriters and safer roads for us all. A win, win.
The question being asked now is, could a black box for health insurance be developed and revolutionise the sector? Could a deeper understanding of the patient and their ongoing health conditions possibly allow the health insurance underwriters to offer bespoke policies for their customers?
Let's consider how it might work. Telematics in motor insurance provides real-time data to the underwriters about the quality of the insured's driving. Rather than tarnishing all drivers with the same brush when underwriting a policy, it allows the driver to prove they are - and able to be - a better driver than is considered the norm. So, how would this work with health insurance?
One would need a way to monitor the individual's health to provide a real-time risk profile – essentially providing the opportunity for bespoke underwriting of their policy. How can this be achieved, and how could that level of health data be provided to the underwriter for them to make an informed decision? Advancements in mobile device technology could provide the answer to that question.
Ninety-three percent of the UK population owned a smartphone in 2022, with the majority containing sensor and camera technology endlessly collecting data to monitor the health and fitness of the individual through apps already installed in the device. A new technological advancement is in development that harnesses this existing technology to turn a mobile phone into a personal medical scanner – with a straightforward installation. All sounds a little Sci-Fi, doesn't it? The patient can monitor and record their temperature, heart rate, blood pressure, oxygen saturation, and respiration. The results of the scans are analysed by contemporary AI technology to provide bespoke support and guidance to manage the user's health through an intuitive app on their phone.
This data is safely and securely stored in the cloud and is the key to unlocking the potential of the health insurance sector. The factors affecting insurance policies often relate to lifelong and critical conditions. The new technology provides a window into the real-time health of the patient, and like the black box in motor insurance, it can provide insight into how the patient is managing their health and wellbeing. Let's consider Asthma as an example. The respiratory data collected from the patient's scans will show how well they manage their condition with treatments such as an inhaler. It will also show if the patient is doing something detrimental to their situation, such as continuing to smoke, for instance, which could lead to more attacks and the potential of increasing complications leading to more severe conditions such as COPD.
How the insurance company uses the data is a broader discussion. Still, in the Asthma example, we get an insight into how the health insurance underwriters can adjust the risk profile of the individual based on their behaviour, like the motor black box. Additionally, improvements or deterioration in the patient's condition and overall wellbeing will be available in real-time to allow further underwriter discretion.
The opportunities are endless as the technology develops and becomes more widely used in patient condition management in healthcare settings and across industries. The democratised data will also offer a more comprehensive comprehension of life-long and critical conditions that, even if not adopted by the health insurance sector, will provide significantly more data for underwriters to make informed decisions.
The question remains: Is it time for a health insurance 'black box'?
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