How much should insurance companies know about the things they insure?
US dental insurer Beam Dental has sparked concerns among some of its customers after sending them a package of perks that included a connected toothbrush they must use with an app that transmits data on their oral hygiene habits to the company.
Beam Dental says its customers’ data is not shared with any other company, and that the initiative is to promote better hygiene, allowing it to offer better rates: many such policies in the United States are financed by employers, leading the founder and CEO of the Beam Dental, Alex Frommeyer, to write articles such as “A CEO’s guide to group health 2.0", encouraging businesses to garner as much health data about their employees as possible.
Due diligence or a violation of privacy? After all, car insurers know all about our accident rate, and in some countries the only way insurers will take on new drivers is by installing a black box in their car to collect info on their driving habits. Life insurers, for example, ask would-be clients about their habits and exclude or charge premiums to smokers and heavy drinkers, or practitioners of high-risk sports.
The difference, say some of Beam Dental’s customers, is that the company is storing real-time information about them via a device connected to the internet, whereas traditionally, we can decide what information we provide insurers with, unless they demand evidence, analysis or diagnosis.
Should somebody with poor dental hygiene pay more for their health insurances than somebody who brushes and flosses four times a day? Given that the calculations of an insurer are carried out on the whole of its portfolio, it could be argued that if an insurer secures a higher number of clients with the right habits and practices, it’s going to make more money and therefore offer better prices — if it decides to transfer them to the customer. People with poor dental hygiene habits would be pay more or seek out insurers willing to accept a higher risk.
In reality, this has long been the case in motor insurance, hence the use of black boxes, sensors, apps, etc. Meanwhile, more and more companies are now offering employees access to genetic testing, a practice that some critics say gives people information they aren’t prepared for and that can prompt decisions such as removing certain organs based on a presumed disposition toward certain cancers that could have been managed through regular monitoring. On the other hand, an employee with higher risks could, hypothetically, increase the price of the collective health insurance policy that companies offer to their employees, which could involve discrimination, contrary to the provisions of the Genetic Information Nondiscrimination Act (GINA) of 2008.
It is easy to imagine other types of uses: would I get better home insurance if I decided to share the data generated by certain devices in my home that could prevent flooding or fire? What about sharing my alarm data, which shows that I am very rigorous in its use and, therefore, a lower burglary risk? The use of wrist bands to monitor physical activity in corporate environments, for example, would be a similar case: every company wants healthier employees who exercise regularly. But when that interest is translated, in addition, in better prices in the corporate health policy, the question could, again, give rise to discrimination toward employees whose lifestyles are regarded as unhealthy, since they would suppose a net worsening of the portfolio and, therefore, a higher risk.
The insurance business has always been assessing risk and offering a contract that covers the eventuality that this risk occurs, a contract based on the probability decided by the company. The scales that are traditionally applied in most branches of insurance are simple indications based on parameters that do not affect privacy much, such as age, sex or some circumstances evaluated according to questionnaires. In this sense, insurers carry out their work in an uncertain environment, they insure relatively blindly and trust that the parameters they establish allow them to approximate the probability of risk. In the internet of things age, it makes sense for insurers to gather as much information as possible about the risks they cover. Is this compatible with your customers idea of privacy? Should it be? Do customers prioritize it over lower prices? Are we heading toward an increasingly controlled environment where most risks can be detected immediately and influence what we pay for our insurance, along with a healthcare model increasingly based on prevention? How prepared is the average person to share information with their insurer?