Why insurance companies should take fitness apps seriously

At the beginning of the year, an evaluation caused a stir even away from the watch industry. The consulting firm Strategy Analytics determined that Apple sold more units of its Apple Watch in 2019 than the entire Swiss watch industry altogether.  

When IT companies know more than insurance companies

31 Apple was able to bring millions of their smart watches to the consumers in 2019. On the other hand, there was a total of 21 million watches from Switzerland.[1] It is no secret that a smartwatch tells more than just time. It reminds the user of appointments or informs them of incoming WhatsApp or SMS messages. That is without a doubt practical, but the majority of the people who buy an Apple Watch will have done so due to the fitness and health functions. Because Apple positions the little "wrist computer" as a healthcare product and supporter of a healthy lifestyle. The device measures the pulse of the user, determines their distance for the day and can even detect falls. And thanks to gamification, the user is also regularly motivated to new maximum performances.

The good sales arguments for such a device are superficial. The healthcare for the user is in focus. Or is it not? Apple is more likely interested in an important "byproduct" that represents the actual value for tech companies: unlimited data about the user. Google shows how important this information actually is for companies. The US corporation did not have any fitness devices in their assortment. And then the search engine decided to buy the company Fitbit, which produces fitness trackers, for over 2 billion USD.

Information about the consumer's fitness, statistical distributions regarding cardiac arrhythmia and of course movement profiles: everything is valuable data that could also help the insurance industry.

Digital Health starts a new business model

"E-Health" or "Digital Health", meaning applications for health and fitness, have become a lucrative market. Such solutions open up new chances for insurance companies, particularly in the personal sector.

Tariff models that promote a healthy lifestyle by the policyholder are particular obvious, even if there are limits in Europe and in particular in Germany compared to the USA. Data protection: circumstances that do not disturb US citizens due to their different mindset can quickly lead to privacy concerns among German consumers. And a resolution proposal introduced to the Bundestag in October 2019, which is directed against such "telematics tariffs" in the health insurance industry, should prevent such products completely. The private health insurance sector spoke of a phantom debate in a subsequent notification.

Apparently there is a lot of fear of opening Pandora's famous box. So a treasure of data that is useless? Far from it. The user voluntarily delivers a lot of data that still remains valuable for product managers and actuaries.

Use cooperations as new sales platforms

"Health" from Apple, "Fit" from Google and also "Health Mate" from Withings are central data stores on the user's smartphone. They put together different bio-parameters from the user from different devices in a central location. The consumer receives a status report about their physical fitness.

They are examples for apps that are used by consumers who are interested in their health, physical fitness and apparently enjoy moving. And the world of apps knows many more programs than those from the US corporations. It may be advantageous for insurance companies to actively look for cooperation partners. The collection of (anonymized) data is only one facet here.

From the insurance company's perspective, other scenarios for use are imaginable as a result of cooperations:

• Connection to established apps from gyms and wearables for direct user contact within the scope of the marketing mix. Active users could then be contacted regarding supplementary insurances or bonus programs.
• An added value to the insurance company's app through interfaces to fitness apps. Bonuses that promote a particularly healthy lifestyle are possible here. A "gamification" module in the app that motivates the user to beat themselves again while running, going for a walk or swimming is a key to customer loyalty and offers occasions for conversations.
• Supplement to independent apps or participation in apps that support the user in their everyday life. The insurance company thereby receives the chance to position themselves as a coach for the user.
  
  

What the insurance IT must do for this

Completely independent of the selected model, all of these strategies have direct effects on the insurance company's IT department. Apps and app providers deliver countless data and measuring points. In order to reach the right conclusions, to filter out commendable behavior or to use data as a basis for calculations, there must be transmissibility in the individual systems. Interfaces are needed that preferably work through the cloud. This represents the basis of most apps available on the market.

In order to be able to quickly react to new trends in the dynamic E-health sector, agile work methods are needed. Traditional process and project ways of thought are simply too slow.

And analyses are needed to obtain knowledge and ideas for new products from data. In order to detect patterns in large amounts of data that lead to hypotheses and findings, the use of AI is more or less made for this. Digital Health promises a lot of chances for the insurance industry if they do their homework.

[1] https://www.horizont.net/tech/nachrichten/auswertung-apple-verkauft-mehr-uhren-als-die-komplette-schweizer-uhren-industrie-180645