How technology and “Big Brother” are changing the insurance world as well as our lives

Managing Your Money

When I received my last car insurance renewal, I called the company to see if there was anything they could do to reduce my premium.  The woman offered the options of installing a device in my car or downloading an app, both of which would monitor my driving (e.g. speed, acceleration, braking, etc.), and in turn they would offer me up to a 15% discount on my car insurance. Now, this sounded quite alluring to me as I love to save money. However, after further consideration, I determined that this device wouldn’t always work in my best interest, if you catch my drift.

It brings to mind the whole issue of our lives being monitored. Do I want an insurance company knowing exactly how I drive, where I go, when I’m out?  I suppose if I was a driver who never went over the speed limit and this device would save me money and work in my best interest, I might consider it.  I suspect that with time we may have no choice but to install these devices in our cars in order to be insured at all. It certainly helps the insurance company with their risk management.

What’s interesting is that this idea has now moved into the area of life insurance. It started a few years ago in the U.S. and recently, one of the large Canadian insurance companies has added this option to their life insurance policies. By wearing a health monitoring device, you can save up to 15% on your life insurance premiums and you can earn a free Apple Watch at the same time. With the Apple Watch, they monitor your lifestyle, everything from your heart rate to how many steps you take. Getting the maximum discount on the life insurance policy and a full credit on the Apple Watch is basically dependent on how active you are and how on top of your health you are. So, they are rewarding people who are making an effort to be healthy thereby reducing the risk of death, in turn saving the insurance company from having to pay out a claim.  And so far, lots of people are jumping on this opportunity.

Considering a large portion of health care costs, and in turn insurance payouts, are driven by behaviour, particularly bad diet and lack of exercise which can lead to obesity, diabetes, heart disease, etc., this idea of health monitoring makes total sense.  But the question is, would knowing an insurance company is monitoring your behaviour be enough incentive for you to make healthy choices?  Would you be comfortable having your health data monitored this extensively? Is the cost savings on insurance and the potential of a free Apple Watch enough for people to be more proactive about their health?

It’s hard to predict all the ways that your data can be used, and many question whether or not it could end up being used against you. Or even worse, could your health and lifestyle data get stolen by hackers? Greater monitoring would obviously create more concern over privacy. I think most of us would be blown away by the amount of data about us that is actually out there.  And the craziest part is that we’ve agreed to all of it!  How many times have you downloaded an app or gone on a website that asks for you to “accept” or “agree” to their terms and conditions, or their privacy policy?  How many people actually read the entire terms & conditions or privacy policy that they are agreeing to?  Most don’t, and don’t realize all the ways they are agreeing for their data to be used.  People underestimate the degree to which they are being monitored.  Can you believe a recent piece by Global News is asking if our devices are actually eaves dropping on our conversations? I mean this is just insane!  Even Google has admitted to scanning our emails to target personalized advertising.

So this begs the question, if you are already being monitored in so many ways, why not benefit from it, IF it works in your favour? If you already have a healthy lifestyle then this type of health reward system will work well for you and save you money. But if you have a less than healthy lifestyle and think that this type of system might motivate you to get healthier, know that if you don’t improve your health lifestyle you may be penalized as your premiums will likely go up. So, consider your decision very carefully.

Another thing I’ll mention is about genetic testing.  It has become so simple, easy and cost effective to do genetic testing, either for medial information or genealogy.  Genetic testing does not currently impact life insurance but there’s no way that we can have this information available and it not effect life insurance at some point in the future. If you think life insurance will be part of your future, consider doing it before you do any genetic testing because the current law could change at any time.

Our world is changing and it’s hard to fight it if you are at all technologically connected.  My advice is to ask lots of questions before you jump on this kind of opportunity to save money by being monitored.  I think one of the key elements to this being a successful program is that it remains non-mandatory. Reduced insurance premiums and a free Apple Watch could be a great motivation to some, so let them have the choice to participate. Others may be more concerned about privacy and security so let them opt out. Inform yourself, and “don’t jump in where angels fear to tread.”

Lynn MacNeil, F.PL. Vice President, Investment Advisor, is a Financial Planner with Richardson GMP Limited in Montreal, with over 23 years of experience working with retirees and pre-retirees. For a private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5795 or [email protected].

The opinions expressed in this article are the opinions of Lynn MacNeil and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Richardson GMP Limited, Member Canadian Investor Protection Fund.