In my recent article looking at the ban being proposed by the EU, I said that…

“this will not stop insurers using electronic data about health provided to them directly by the proposer / policyholder, for example through a digital watch of some kind. In essence, the restriction is on secondary use of healthcare data, not on the gathering on a primary basis by insurers of data they use to assess health insurance.”

Michael Rolfe, Swiss Re’s ‘Head Solutions Group L&H Asia’ talks in this article about lifestyle data being a turning point for the industry…

“We want to make it easier for people to buy insurance and to create more ways for insurers to connect and engage with policyholders. A fundamental part of this change means recognising people are holistic and dynamic beings whose health is affected by both nature and nurture.”

It’s a Sales Thing

Let’s examine this a little more. The move to lifestyle data is very much about facilitating the sale of policies – “we want to make it easier for people to buy insurance”. Nothing wrong with that, so long as that process for helping people access the market doesn’t in turn result in other people finding it harder to access the market. This is illustrated by the increased attention now being given to financial inclusion in digitising insurance markets.

There’s a danger that this ends up being about making it easier to sell insurance to the people that insurers want to insure. And sure, some of you will make the point that this is what a private insurance market should be about. And that’s fine on an individual firm basis, but not fine on a market basis. If the market overall becomes too selective, then concerns about fairness, access and public confidence arise.

Increasing access to markets needs always to be seen in the context of the value gained by the consumer. Insurers are increasingly thinking of delivering value in terms of both product (risk transfer) and service (health outcomes). Consumers engaging with insurers through that type of product / service mix will find that it really is dynamic and holistic, in that, for example, a lowering of health outcomes will lead to a lowering of risk transfer. So there’s a risk here of increase access / sales leading to a product / service mix that over time erodes value for the consumer.

Lifestyle Data

Michael recognises that lifestyle data raises ethical questions..

“Fairness, ethics, accountability, and transparency are essential. Customers need to be confident that their data is going to be used in the right way. All players in the ecosystem (insurers, wellness platform providers) must be clear about how the data will be used. For consumers to buy-in and give permission, they need to know their data is secure and they are getting tangible value in return.”

It’s an odd positioning of such concerns. Firstly, it assumes that there’s nothing wrong with insurers using lifestyle data, so long as privacy and security are handled correctly. That’s a big assumption to make, given public attitudes to the extent to which insurers collect data and how they then use it (more here).

Secondly, the focus is on data, when, in lifestyle underwriting, the analytics are just as important. Indeed, the gathering of lifestyle data is often driven by device providers, while the ‘innovations’ Michael has to deal with are largely driven by analytics providers. Given that a device or algorithm cannot measure ‘health’, but instead measures a collection of proxies for health, the analytics interpreting that lifestyle data for signals of health outcomes is where a lot the ethical issues lie.

Thirdly, a further level of analytics based interpretation also needs to be factored in. In analysing that lifestyle data for signals of health outcomes, the insurer is also interpreting that person as well. By this, I mean that person’s character and relationships. Again, there are a lot of ethical issues here, for example to do with autonomy and personhood.

A Good Overview but…

In conclusion, Michael Rolfe’s article gives a good high level overview of how innovation in life and health underwriting needs to be managed in order to produce the results Swiss Re is seeking. On its own, it’s a relatively easy article, of which there is an increasing number. The challenge for firms like Swiss Re is to then build upon it with wider work on the ethical questions that the article gives rise to.

This Swiss Re has attempted though an initiative organised by the Monetary Authority of Singapore (more here). The problem so far is that that and similar work is fashioned in a ‘this how we will do ethics for you’ way. It’s too top down and so unlikely to build trust.

The EU has signalled that it has a pretty big problem with how insurers might use primary healthcare data. Reinsurers and insurers need to remember that such concerns can just as easily arise in relation to the lifestyle data they intend to use in its place.

Duncan Minty
Duncan Minty
Duncan has been researching and writing about ethics in insurance for over 20 years. As a Chartered Insurance Practitioner, he combines market knowledge with a strong and independent radar on ethics.
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