The insurance industry is currently venturing into unchartered waters with regard to personalising policy offerings for individual customers. Accenture reported that 80% of us would welcome more personalised offerings from insurance providers[1]. Indeed, the insurer that researches high flood risk areas and provides residents with targeted home insurance policies would likely stand out from the rest as the more caring business – one that values the customer’s needs to mitigate portentous risk. But would customers feel comfortable being flooded with premium quotes just minutes after uploading a picture of their brand new BMW in the driveway?

Scales Data Balance

In terms of personalising policy offerings, insurers already have a degree of wind in their sails with the implementation of ‘black box’ devices to reduce high-risk car insurance premiums. Last year, Ptolemus, a consultancy specialising in telematics and location-based services, recorded that 850,000 of us installed a ‘black box’ monitoring device into our vehicles[2]. To many this appeared a sensible step forwards, rewarding policyholders who drive responsibly and potentially making premiums more affordable for new drivers. Yet even this level of personalisation was met with mixed reactions, with many rallying against the invasiveness of having an insurer peering over your shoulder every time you get behind the wheel.

These insurance practices are now straying into the health sector, with VitalityHealth now offering a smartwatch to their customers for just £99, provided they maintain an active lifestyle. Soon then, we may be seeing health or life insurance premiums being calculated according to a ‘black box’ methodology, with insurers tapping into the information collected by an individual’s smartwatch or Fitbit and using that to define a behavioural-based insurance premium. The potential to track diet and drinking habits via smartphone apps, such as MyFitnessPal and YAZIO would give insurers an even more informed view of an individual’s health.

On top of this, social media presents an obvious data source for insurers to gain an intimate view of customers’ lives. Offering an insight into where we spend our time, what we do with it, and whom we spend it with, along with additional information such as dietary choices and travelling habits, social media provides a plethora of useful data, allowing more bespoke premiums and better targeting capability.

It is at this point that most readers will start to feel unsettled. As insurers attempt to personalise their premiums, and to provide more targeted offerings, they will likely tread a dangerous line. To capture the younger generation, an insurer must offer more bespoke, highly personalised and better targeted offerings; yet, an older generation of policyholders will likely feel alienated by such invasiveness and will actively resist such a breach of their personal information. It is up to the insurer then to navigate these waters carefully.