A Selfie Worth A Million (In Insurance Coverage?)
Biometrics and Life Insurance
There are currently an estimated 10 billion devices connected to the internet, a number that is expected to drastically increase in the near future. Rare is the consumer who doesn’t spend the majority of their day connected to the grid, via smart phones/homes/watches/etc. We love our gadgets and use them extensively in our daily lives, but almost every device on the market ultimately serves the same purpose—collecting data.
Life insurance carriers rely on personal data for underwriting purposes but collecting that information has traditionally been a lengthy process that involves medical exams and mountains of paperwork. Today’s “I want it now” society has given rise to a consumer base unwilling to wait the weeks (or longer) it can take carriers to approve a policy.
In fact, the 2017 Insurance Barometer Study published by LIMRA and Life Happens found that 51% of consumers surveyed listed “faster sign-up process” as an important factor when buying life insurance. That same study found 7 out of 10 respondents would be more likely to purchase life insurance priced by data and without a physical exam. The industry is responding by delving into the world of biometric data.
According to Munch RE, wearable tech (and the analysis of biometric data gleaned from these devices) has become the catalyst for change to the traditional underwriting process. Select carriers first started using biometrics a few years ago by giving wearable fitness monitoring devices (Fitbit, et al.) to new policyholders.
Programs like this are modeled after wellness initiatives, but also allow for quicker, cheaper, and, if the research is to be trusted, more accurate risk assessment. While not yet commonplace, several carriers are looking at biometrics as a way to improve consumer experience in a number of ways, including expedited policy approval and discounts/perks for health-minded customers.
The legalities and consumer confidence surrounding biometrics as it relates to life insurance are still being determined. It’s a given that any personal data used for policy underwriting (whether it be through traditional or tech-based means) is both necessary and submitted voluntarily. For agents and advisors, it will likely be more challenging to convince a Baby Boomer into allowing an insurance provider to track their physical activity than it would a Millennial. Concerns over who can access that data and what they’re doing with it might outweigh the enticement of policy discounts or third-party perks. Of course, when technology presents a problem, it can be quick to offer a solution.
A new product being rolled out by Lapetus Solutions uses facial recognition software to add an extra layer of security to the customer’s account and help mitigate fraudulent claims. The platform—Cronos—also incorporates biometrics in ways that go far beyond activity tracker-based programs. In addition to the enhanced security, Cronos’ facial analytics technology can scan a customer-submitted selfie, along with additional data, to predict individual life expectancy.
The company claims their product, which became available last year, can eliminate the need for physical examinations and provide quotes within minutes. Essentially, the software scans an image of the applicant’s face and extracts biological, physiological, genetic and behavioral information. This information, combined with other data, can—in theory—predict life expectancy and mortality risk more accurately than medical exams. Lapetus is also working on further innovations that could potentially identify early warning signs for various diseases and determine whether the applicant is, or once was, a smoker.
The jury is still out on how effective and accurate this technology truly is, and how heavily it will affect the life insurance industry as a whole. That said, this sort of innovative use of biometric-based tech is undoubtedly leading the industry into a brave new world.
Next week, we’ll examine other emerging social, technological, and industry-based trends that are changing the game for independent agents and advisors.