Tag Archives: fitness

New Health Metrics in Life Insurance

A new measure of fitness and health, called Personal Activity Intelligence (PAI), has important implications for both life insurers and their policyholders.

It’s now possible to predict, using new technology, the chances that consumers of all ages will develop heart disease. Even better, if the data from the new technology shows improvement, there is also an opportunity to reduce the potential health risk.

Digital technology applications offer life insurers the chance to engage customers with personalized health data that is both easy to provide and simple to understand. And, of course, this is a win for life insurers, too – customers with personalized health data receive more value from the relationship. After all, enabling healthier, longer lives means a longer lifetime value to the benefit of the policyholder and the insurer.

The secret to personalized health data

There is a secret to this personalized health data, and it is based on cardiorespiratory fitness (CRF). CRF is one of the best predictors of health and mortality, with a direct correlation between cardiorespiratory fitness and lifestyle diseases.

Until now, CRF has been the missing link to quantify the level of physical activity required to reduce the risk of lifestyle diseases. In England, healthcare costs related to physical inactivity are five times more than smoking, and in the U.S. $117 billion health care expenditures per year were associated with inadequate levels of physical activity.

Health data analytic companies, such as PAI Health, offer solutions to make CRF data accessible and relevant to insurers and consumers alike. Customers’ activity levels and CRF data are tracked using a personalized baseline risk assessment. Dynamic, real-time risk monitoring improves customer engagement and reduces risk. Insurers are therefore able to determine the level of risk and understand the health profile for individual customers.

Shifting the conversation from payer to partner

Think of how providers currently handle the customer relationship. Once a customer purchases an insurance policy, the communications typically become almost entirely transaction-based, focused on renewals and claims. What if an insurer had access to data insights that assess customers’ health and risk levels dynamically over time? This now opens the door to a personalized health dialogue.

See also: Making Life Insurance Personal  

One of the largest life insurance companies saw this opportunity when it just entered into an agreement to provide its policyholders with wearable digital devices and gain their customers’ health and fitness data. The insurer will offer rate discounts and other incentives to its policyholders, creating a conversation between the company and its customers about fitness and health.

By using CRF metrics and personalized health data, software tools present complicated data in a comprehensible format for the first time. Here is exactly why tracking this valuable CRF data is not only the best approach for insurers, but also is extremely important in the future of health:

  1. It takes the guesswork out of health: Innovations in biometric algorithms help make big data simple enough for anyone to understand. The data that comes from these algorithms is also personalized for anyone of any health level. It offers the chance to meet people where they are, in a more open and understanding environment, to get them started on the path to a longer, healthier life.
  2. It’s educational and accessible: For most customers, the idea of changing their lifestyle can be daunting. CRF metrics can be a conversation starter opening the door to educational content that naturally supports the transition to a healthier lifestyle, making the entire process less intimidating for customers. What’s more – it’s extremely accessible and convenient, because all a customer needs to do is take a minute out of the day and get started via smartphone.
  3. It’s universal and trusted: Health isn’t one size fits all, but the beauty in CRF metrics such as the Personalized Activity Intelligence (PAI) is that they work for customers at any health level and with whatever type of exercise they prefer. And what many customers don’t realize is that they are becoming healthier through daily habits, such as mowing the lawn, washing the car or doing housework. By using an activity metric underpinned by CRF, you are providing customers with data that is trusted by the AHA, NHS and sports science experts as a proven measure of health.
  4. It fits real life: CRF activity metrics take a holistic look at improving activity, rather than looking day by day. This means if a customer misses a day or needs a break, it isn’t the end of the world. The activity prescription provided to the person readjusts and the risk models update, so the person can stay motivated on the journey to his or her best self. Improving CRF is a physiological adaptation that requires continual work, which is exactly what the data molds to.
  5. It doubles as a measure of health: As an insurer, it’s important to know the health levels of individual customers. A simple score tells the insurer and its customers exactly where they are, to achieve optimal health. The information might be incorporated into rates and underwriting.

The time is now to start engaging customers in a dialogue using personalized health metrics that can lower risk and costs, while adding more to the relationship.

See also: This Is Not Your Father’s Life Insurance  

Through this data, insurers and policyholders alike have a new opportunity to advance the way we monitor and act on health, to help customers enjoy happier, longer lives.

How You Sleep Matters to Insurers

Sleep allows the body and the brain vital repair and recovery time, giving hormones the opportunity to replenish. Both inadequate and excessive sleep have been associated with early death. We are getting a better understanding of the health consequences of low levels of physical activity combined with inadequate or excessive sleep.

Having at least seven hours of sleep each night has been described as a “health necessity” for adults. Less leads to reduced cardiovascular fitness and metabolic disruption as a result of altered hormone levels, which can cause weight gain. Excessive sleep is probably evidence of an underlying chronic illness that will itself shorten life.

Wearables and accompanying apps help monitor phases of shallow and deep sleep at night. The amount of time spent in and out of each phase can be influenced by underlying health. Sensors in the devices can detect when a person is lying in bed and moving, generating data that could be valuable to life and health insurers because the amount and quality of sleep provide important insights into our long-term health.

Sleep is influenced by genetic, medical, behavioral and environmental factors, and problems often increase with age. How well we sleep is governed by melatonin (released from the pineal gland), matched by a fall in levels of the activity-related hormone serotonin. These changes align our body clocks with the circadian rhythms of day and night.

See also: Confessions of Sleep Apnea Man  

Regular bedtime in an environment with suitable levels of light, sound and temperature is important for “sleep hygiene.” Smoking, alcohol, caffeine or food before bed and exposure to “blue” light from tablets or screens can all disrupt sleep. Poor sleep may result from chronic health problems, anxiety or depression but causes psychological distress in its own right. Work performance, judgment and social relations are harmed. Excessive daytime tiredness increases the chance of accidents.

Disorders of sleep include nightmares and sleepwalking. Sleep apnea is most associated with excess mortality. Often obese, those suffering from sleep apnea are at particularly high risk of cardiovascular problems. The partners of these patients also often suffer from chronically disturbed sleep.

While consumer-grade wearables and apps may lack the detailed analysis in sleep studies that includes core body temperature, hormone levels, circadian rhythm and brain activity, these devices offer an approximation of sleep architecture that could help individuals improve sleep hygiene. For insurers, self-reported sleep data could be incorporated within wellness and fitness product protocols in the future.

Tips on Evaluating a Wellness Program

This is news you can use.

If you want to evaluate the cost/benefit ratio of a wellness program, the following is a list of costs that are almost always overlooked in wellness evaluations. These are not the only things that need to be evaluated, just the ones most commonly overlooked.

When the items in the following list are fully considered, wellness evaluations can look entirely different.

1. The cost of staff hired to manage the program. A rule of thumb is to multiply their salary times two to account for FICA, benefits, office space, training, workers comp, management, etc.

2. The cost of wages for workers while attending wellness events at work. One company I looked at was spending about $175 per employee per year on this, not a trivial sum.

3. The opportunity cost of the HR staff running the program.

4. The full cost of wellness communications. Sending wellness communications to people at work has a wage cost. See #2 above.

5. The total cost to evaluate the program periodically.

6. The cost of false positives, which come from sending employees to doctors when they’re not sick. This is especially pernicious if you’re paying for wellness exams for employees. At one company, the cost of the false positives, sometimes as high as $80,000 per event, nearly cost more than the physical exams themselves. You have to examine claims data to see this.

7. If you have a fitness center, you need to take into account sports injuries for users. (Understanding this also involves access to claims data.) I’ve evaluated the impact of fitness centers for three very large companies. Taking into account sports injuries, etc., you could not make the case for an ROI for any of the three of them. In one company, we examined claims data on a) moderate or occasional fitness center users, b) people who used the fitness center regularly, and c) nonusers. Nonusers had the lowest average medical costs. Moderate users had higher medical costs than nonusers and regular users had the highest medical costs, a perfect reverse correlation.

Surveys of employees are notoriously unreliable. They measure employee opinions, at best, and opinions are not facts. As we all know, sometimes in employee surveys people will say what they think the surveyor wants to hear.

Medical claims and sick pay data are about the most meaningful ways to measure wellness outcomes. Short- and long-term disability data can be useful, too, as can life claims experience when compared with norms. If you only use employee surveys and other surrogate data, too bad.

I met an actuary who spoke at a conference on this topic and used the measurements above to evaluate wellness programs. He said he’d never seen one that had a positive ROI, except ones that used payroll deduction penalties.

The Case for Connected Wearables

It was an event maybe even more anticipated than Neil Armstrong’s Moon shot in 1969. I had never tuned into one before, yet there I was, sitting in my pajamas at 1 a.m., frantically trying to get back onto the streaming podcast that my iPad had just dropped, as millions of other nerds the world over were trying to do the same thing.

Apple’s product announcement event on Sept. 9, 2014, had drawn unprecedented interest. I certainly was expecting Apple to “do it again” – you know, change the world in a subtle yet pervasive way, as I am sure many others struggling to get onto the live webcast also believed would happen. After all, the company that Steve built had done it with iTunes, with the iPhone and with the iPad. And now we all wanted to see if Apple’s first wearable device – the Apple Watch, was going to change our lives in the same way.

Well, we definitely saw something that early morning in September, but the realization of the promise still lies ahead, with the first retail delivery of Apple Watches not until late April 2015. What is certain is that Apple has successfully moved the idea of a connected wrist health and fitness tracker from the niche arena of health-conscious individuals to the mainstream “Joe Public.”

Interestingly, even if Apple falls short this time, it has set in motion a great race with Microsoft, Google, Samsung, Fitbit and many others to fulfill and surpass the vision that we all saw in September. In 2014, world-wide revenue from the sale of wearables was roughly $4.5 billion, but, in 2015, expectations are sky-high. Some experts predict sales will increase as much as three times, fueled in the most part by the Apple Watch.

So why are wearables a good thing for insurance?


The rise of wearable fitness trackers as part of corporate wellness programs has been an emerging trend over the last 10 years. In the past, enlightened companies were giving out Fitbits to help employees track their own fitness. More recently, companies have been trading program participation and fitness data captured from such programs for discounts on their corporate health insurance. For example, Appirio, a San Francisco-based cloud computing consultancy, was able to get a 5% discount ($300,000) off its insurance bill in 2014, while BP America distributed around 16,000 Fitbits to employees as part of an integrated wellness program and claim to have put a brake on corporate healthcare cost increases by slowing them to below the U.S. national growth rate in 2013.

A key ingredient to the success of these programs is the engagement of the members, so that healthy behaviors are encouraged and rewarded. In the BP example, the Fitbit data was easy to “gamify” because of the connected nature of the device. Members competed on a number of challenges, including the “1 million step” challenge, simply by wirelessly “syncing” their devices. Cory Slagle, the spouse of a BP employee, was able to trim $1,200 off his insurance bill through participation in this program — dropping nearly 32 kilograms and 10 pants sizes and reducing his high blood pressure and cholesterol back to normal range in just 12 months.

Vitality of South Africa has recognized the importance of a holistic health and wellness program for well over a decade and has built up an impressive array of statistics, including:

–Participation in health and fitness programs reduces health claims by 16%
–Logging fitness activities reduces risk by 22% for the unhealthiest category of participants
–Participating members are as much as 64% less likely to lapse on their insurance as non-participants are
–Participating members have as much as a 53% lower mortality rate than non-participants

The only trouble is that participation in such programs remains minuscule, with opt-in rates in some cases of just 5% for those eligible to join. Despite the programs’ value propositions being augmented with an affinity network of providers supplying goods and services at a discount for participating members, opt-in rates and persistency remain problematic.

A recent survey by PWC found that, if the connected wearable device was free to the member, then about two-thirds said they would wear a smart watch or fitness band provided by their employer or insurer. Cigna completed a connected wearable pilot in 2013 involving 600 subjects, which indicated 80% of the participants were “more motivated to manage their health at the end of the study than at the beginning.” In the U.S., United Health, Cigna and Humana have already created programs to integrate connected wearables into their policies, to create reward systems based on data sharing. In one innovative program, a “wager” penalty system was found to be three times more effective in motivating healthy behavior than the typical rewards these programs offer. The “wager” involved the member’s signing up to achieve and then maintain reasonable fitness targets over the course of the year to avoid having the cost of the health screening be deducted from their salary.

A key hurdle to overcome with the data generated from connected wearables is privacy and security. Individuals want to know what insights are being generated from the data being collected and want to selectively share with the program based on the perceived value they get back. They also need to know that the data continues to be secure and private once shared. Apple is working this angle through its HealthKit, which is positioned as the data control room for consolidating and securely sharing health- and fitness-related data to selected parties. There are already in-the-field health trials in progress with Stanford and Duke universities that are being powered by HealthKit. Google, Samsung and several others have also launched similar competing frameworks, so the data privacy issue is understood and being addressed by the technology companies offering products in this space.

I want to mention an innovative, data-driven, life insurance program that currently doesn’t use any wearables but easily could. AllLife of South Africa provides affordable life and disability insurance to policyholders who suffer from manageable chronic diseases, such as HIV and diabetes, and who sign up to a strict medical program. Patients get monthly health checks and receive personalized advice on managing their conditions. Data driving the program is pulled directly from medical providers, based on client permission. If a client fails to follow or stops the treatment, then the benefits will be lowered or the policy will be canceled after a warning. The company assesses its risk continuously during the policy period, contrasting with the approach of other companies, which typically only assess risk once, in the beginning. This approach allows AllLife to profitably serve an overlooked market segment and improve the health and outlook for its customers. It plans to cover more than 300,000 HIV patients by 2016.

The video of AllLife’s CEO, Ross Beerman, on YouTube is quite inspirational, and I recommend you see it. He says, “Our clients get healthier just by being our clients.” He also mentions the challenges of building an administration system to support AllLife’s customer-engagement model.

In summary, several intersecting trends have conspired to make this the perfect time to consider the launch of insurance programs and products powered by the new insights from the data being made available through wearable fitness and health trackers:

The whole fitness and healthy lifestyle perspective has entered into the mainstream culture
Devices like the Apple Watch have become fashionable, objects of desire
The data from these devices is easy to capture and share – no forms to fill in
–The data is of clinical quality, in at least some cases, and therefore useful for actuarial models
–Insurers have already started to jump on the idea of “telematics” for humans for risk pricing
–Feedback from this data is able to positively modify behavior to reduce health risks and improve the quality of life for those participating

I am still undecided if I’m going to be up at 1am again, this time outside the Apple Store, waiting for the Apple Watch to go on sale. However, the line outside the Apple Store that night could be very fertile ground for agents selling polices driven by the data these new devices will provide, if only companies act now and get their programs in place.

Thanks for reading, and see you in the gym 🙂

This article originally appeared in the January 2015 edition of Asia Insurance Review.