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Name Your Price: Drawing The Line Between Savings and Privacy

Posted on October 01, 2015 by Guy Weismantel

 Digital Insurer Blog

Where will the line be drawn between savings and privacy?

With the news that Uber is partnering with Metromile to offer Uber drivers “pay-per-mile” insurance, along with  AirBnB announcing their host protection insurance for their renters to supplement existing insurance policies when renting out their rooms and houses, we may be seeing the first cracks in the decades-old all-encompassing insurance policy marketplace.

And really it should not surprise us. After all, it was just a few years ago when an airline ticket bought you everything from your luggage, to the seat you wanted, to free drinks and hot meals back in the economy cabin.  These days your ticket buys you admittance to the inside of the airplane—and basically nothing else.  Every other option is now on an a la carte menu for you to opt into or refuse—wifi, beverages, meals, extra bags, preferred seating, movies—it’s all an upsell by the airlines.

Now that the door has been cracked a bit, what might be next?  Well, as seen with the awesome app MyFitnessPal  being acquired by UnderArmour, in industry after industry, it’s all about the apps and the data.  And if apps in cars can now track how far we drive and how often we’re slamming on the brakes in order to save us money on our auto insurance, might we also be able to save some money on our health insurance by providing our health data to our carriers as well?
After all, (and full disclosure here, I own a FitBit and love MyFitnessPal), when I step on my Fitbit Aria scale, it knows my weight and BMI. MyFitnessPal knows what I’m eating and drinking, and if I’m lying, the scale will catch me. If I go paleo and lose 10 lbs or complete an hour of CrossFit every day, shouldn’t I be rewarded with a lower health premium?  Previously you’d have to take a blood test and tell the underwriter if you were a smoker.  But what if my rates could vary based on how healthy of a lifestyle I’m leading?

And once you drive your health through this gap, you can disaggregate any part of our lives into the proverbial Chinese menu of costs.  Might I pay more for life insurance if I drive my family vs. flying, which is inherently less safe?  What about feeding my travel itinerary into an app and getting personalized travel insurance based on what I do on vacation?  And don’t get me started on the “internet of things”. We already provide our thermostat and CO2 levels to Google through their Nest products—shouldn’t we get a rebate from our homeowner’s policy for keeping the house at a cool 68 degrees?
Digital Thermostat

What’s interesting about these scenarios is how easily they flow once you get started.  Which is how the whole apps market works—you break down a process into pieces and start to monetize the individual parts.  

So why wouldn’t we want to do the same with our insurance?

As younger people continue to lead the movement toward the sharing economy, showing less propensity to care about exchanging data for cost savings, it’s an increasingly interesting question.  In a recent survey by the National Association of Insurance Commissioners (NAIC),  forty-three percent of drivers between the ages of 18 and 29 said they would consider enrolling in a pay-per-mile insurance policy—and that’s with only a few carriers offering it for a relatively short amount of time.  There’s no doubt that the trend line is moving to this model.

Of course the $100,000 question is, “when is enough, enough?”  Will altruistic motivation among younger people to lower greenhouse gases and pollution triumph over passing on personal driving habits?  Will $200 a year less in health insurance premiums be worth the cost of sending your Fitbit data to your health insurer?  Will I choose to let someone track my movements in my house in exchange for preferential rates on my homeowner’s policy?  While we can’t say for certain right now, it’s not a huge leap to expect that at some point, we’ll all be asked to “name our price.”

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Mr. Weismantel is the Vice President of Marketing at Vertafore. With 20 years of marketing and financial leadership in companies such as Microsoft, Business Objects, Baxter HealthCare, Caremark International, and Expedia, Guy’s career has focused on bringing differentiated products to market and providing the “compelling reason to purchase” for customers and prospects alike.

Guy has a Bachelors Degree in Accounting from the University of Notre Dame, and a Masters Degree in Business Administration from the Kellogg School of Management at Northwestern University.




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