Did you get a new Fitbit for Christmas? Planning on firing up fitness apps like Health on your Apple Inc. (AAPL) iPhone 6 for the new year? Maybe you scored a connected scale for the bathroom?
If so, you’re not alone. Fitness trackers and related gear made it onto many holiday wish lists this year and a report from Future Source Consulting suggests interest in the devices is up in a big way, with a 50% boost in the number of consumers intending to buy one in 2015.
It’s not just consumers — health insurance companies would love to see their customers strap on one of these devices. Gaining access to the output from wearable sensors means accurate data that goes far beyond a checkbox for activity level on an insurance application. It means real-time updates instead of waiting for yearly physicals.
And all that data means more accurate underwriting of insurance premiums and higher profitability.
The future of health insurance lies in this direction and companies like insurance provider Oscar are leading the way.
GigaOm’s Kif Leswing reports that the NewYork-based health insurance company is offering its customers a free Misfit Flash fitness tracker. That’s a free fitness tracker for everyone in the household that’s covered by the Oscar health insurance policy. The company has also developed its own fitness apps that work with the Misfit to track relevant health and fitness data — which the company then has access to.
Oscar Takes the Carrot Approach
Why would Oscar customers agree to this intrusion on their privacy?
For one, everyone in a covered household gets a free fitness tracker. A Misfit Flash isn’t a Fitbit or even a Microsoft Corporation (MSFT) Band, but a freebie is something that many people are happy to have — especially with all the hype currently surrounding wearables. For a family, this could represent savings of hundreds of dollars in hardware costs.
Oscar goes beyond free hardware and fitness apps, though.
Customers who meet target fitness goals earn credits from Amazon.com, Inc. (AMZN) in the form of Amazon gift cards. They can cash in to the tune of $1 per day, or up to $240 per year.
Suddenly it pays to get healthy.
The Oscar iOS (and soon to be released Android) fitness apps also offer medical cost estimate functions and a one-button talk feature that connects customers to a doctor who is able to issue prescriptions over the telephone. More carrots for using the app.
Others Could Use Fitness Apps as Sticks
While Oscar has taken the route of rewarding customers for making use of activity trackers and fitness apps, it’s not a stretch to see a darker use for the technology.
We’ve already reached the point where auto insurance companies are using telemetrics — or “black box” technology — in vehicles to reward some customers while punishing others, based on driving data.
Fitness apps connected to a fitness monitor and supplemented by weight and body fat data from a connected bathroom scale (like the Fitbit Aria) could provide health insurance companies with everything from daily activity levels to sleep quality and heart rate information throughout the day. Just as has happened with car insurance and drivers who push speed limits, this data could lead to health insurance providers increasing rates for couch potatoes.
The potential is also there for coverage to be disputed in the event of a health crisis — based on data the insurance company collects from their customer’s fitness apps that indicate a health issue or condition that the customer has not disclosed.
The age of wearable sensors is upon us. Demand from consumers for activity trackers is growing rapidly. The number of companies making fitness trackers has exploded.
Apple, Google Inc (GOOG) and others are working furiously on fitness apps that are incorporated into their devices and mobile operating systems. And health insurance companies — like Oscar — are exploring ways to turn the popularity of connected health and fitness monitoring to their advantage.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
