‘Enabling a new business model that shifts the focus from selling things to selling results’
CUPERTINO, Calif. – The wearables market could be worth $25 billion in two years, according to a new report from market research firm CCS Insight, and industry leaders say the technology will have a significant effect on the health insurance space as it becomes ubiquitous.
“The data obtained by wearables will produce significant benefits for consumers,” said Michael Macauley, CEO of Quadrant Information Services, which prices and analyzes health insurance policies. “It will help give them the best individual policy and rates, and, for insurers, it will provide a degree of understanding of their market that they can now only dream about. It’s a win-win.”
Another report by the consulting firm Accenture found that 64% of health insurance companies plan to engage with new digital partners in the near future and that many will move toward real-time digital engagement platforms as they adopt mobility and Internet of Things solutions.
“Wearables are powering an ‘outcome economy’ and enabling a new business model that shifts the focus from selling things to selling results,” wrote the authors of the Accenture report.
Many insurance companies, like Cigna and Aetna, are now offering wearables to members who participate in wellness or fitness programs. Programs like these reward members or offer them discounts when they make efforts to track and/or document their efforts to better their health, said Robb Hecht, a marketing professor at Baruch College of the City University of New York.
“In the long run, these incentives lower members’ costs while also lowering insurers’ costs to pay out for medical coverage,” he said.
Instead of relying on estimates, insurers can also use real-time data collected from wearables to calculate risk for individual and group health insurance plans with a higher degree of accuracy.
“Wearables present a way of giving insurance companies access to summarized data that will allow them to scale premiums,” said Chalisa Prarasri, CEO of Opter Life, which makes a lifestyle wearable. “Giving people a financial incentive to better care for themselves is one of the most effective ways to build habits and change behaviors.”