Life Insurer Peers Into Customers' Health Habits Through Their Watches

Australians who commit to wearing an Intel smart watch and hitting exercise goals can earn discounts of up to 10 percent off their insurance premiums.
By Mary Catherine O'Connor
Mar 14, 2016

MLC, National Australia Bank's wealth-management division, provides investment services to institutional customers, as well as individuals. It also sells life insurance, which is the type of product around which the bank has trouble engaging with consumers, according to J. Patrick Bewley, the CEO of Big Cloud Analytics (BCA), a three-year-old U.S. startup that provides predictive-analytics services based on data streams generated by Internet of Things devices.

"When you sign up for life insurance," Bewley say, "you're highly engaged [with the insurance provider] because they ask you so many questions and you might have to go to a doctor, get blood drawn, etc. But then, for decades, all you do is send in a check." During those years, the life-insurance provider has little insight into the policyholder's level of fitness. And when customers revisit their life-insurance policies, it is usually to shop for another provider charging a lower premium.

Using the MLC On Track program, the insurance provider can collect fitness-level data and reward customers for exercising.
In 2014, BCA began working with MLC to develop a program through which the insurance provider could engage with its customers by collecting information regarding their fitness level and then rewarding their consistent exercise. The result is MLC On Track, a program through which customers are issued the Basis watch, which has an integrated optical pulse-rate monitor to measure their heart rate and a three-axis accelerometer to track their movements. They are then asked to strive for specific health goals in order to receive up to 10 percent off their annual premiums.

MLC launched MLC On Track for new customers in November 2015. Via e-mail, an MLC spokesperson said that the company assesses whether or not to charge new customers a fee of AU$250 for the Basis watch, based on information provided on the insurance application. The spokesperson did not disclose what information is used to make that determination, but did note that MLC provides the watch at no charge to the majority of applicants.

Customers are asked to wear the watch for at least 18 hours per day. Those who exercise for one hour daily or walk 6 to 8 kilometers (3.7 to 5 miles), sleep for seven to nine hours each night, and record a resting heart rate of less than 85 beats per minute are eligible for discounts based on a scoring system. Customers who attain the highest score within the first 160 days of using the watch receive a 5 percent premium discount, while those who repeat the high score during the following 160 days receive another 5 percent off.

According to the MLC spokesperson, the average life-insurance premium is AU$2,000 per year, so the upper savings potential is $200 annually for the life of the insurance policy. Based on this, customers who must purchase the Basis watch may recover their costs in a little more a year.

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