The past couple of years have seen disruptive technologies remake industry after industry. A good example to consider is the impact of collaborative robots on the manufacturing industry.
Similarly, the insurance industry is experiencing a remaking thanks to both insurtech startups and giants like Amazon that are redefining and changing the traditional insurance model. The industry is so ripe for change that since 2012, investors have invested over $8 billion in insurtech startups.
However, even as insurtech startups develop more innovative solutions, it is essential to ask a key question; how will these new technologies affect the consumers. Undoubtedly, blockchain, Internet of Things, and Artificial Intelligence have the potential to simplify insurance processes, facilitate individualized insurance plans, and most importantly, make it more cost-friendly for the consumer.
On the flip side, however, these amazing technologies require detailed consumer data. Easy access to such data raises privacy and data security concerns.
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How much privacy is maintained once an insurance company has access to real-time IoT data?
Without a doubt, access to data from IoT devices will help insurance companies provide better service to their clients. Until now, insurance companies had to use indirect indicators such as fitness, history of diseases, age, gender and occupation in the underwriting of certain insurance policies such as a life insurance policy.
However, access to data from wearable devices such as Fitbit and Apple Watch give unique insights to insurers such as how often a potential client exercises or their sleeping habits. Such kind of data is indispensable when performing a risk assessment.
For instance, healthier clients provide reduced risk, and as a result, ensure that more premiums are collected over the lifetime of the policy. That is such a tantalizing prospect that many insurers are switching from traditional models to “interactive life insurance” which relies on data from wearable devices.
That said, it essential to note the risk that comes with giving insurance companies such as unrestricted access to data. Just last year, the Strava fitness tracker was rocked with a scandal when it released the location of US spy posts and military bases. That proves that IoT devices like smartwatches are not secure and can leak your data
Data is indisputably the new currency. As a result, it is prone to misuse either on purpose by malicious people or accidentally by entities with poor data management policies. In turn, the consumer’s privacy and data security is reduced to zero.
Are you ready for the real cost of DNA testing?
DNA testing is more available than ever and at an affordable price. People take DNA tests to learn more about themselves, investigate ancestry and test for genetic disease. All these are worthy endeavors, and they can even save a life.
For instance, taking a DNA test to determine if you have the BRCA 1 gene mutation can help you take the necessary measures that will help you beat cancer.
However, there is the flip side to consider. The reason DNA test kits are affordable is that the companies providing them make money in other ways. In particular, they are selling your data. To prove this, consider the recent sale of 23andme’s (a private biotech company that specializes in DNA testing) database to GlaxoSmithKline.
Moreover, insurance companies are taking an interest in DNA data because the information can help them determine individuals who pose less of a risk especially when it comes to health and life insurance.
Critics have already pointed out that sometimes the DNA tests will show a disposition to a disease that someone might end up never suffering. If the insurer uses the DNA information, the policyholder is at a disadvantage because they will end up paying a higher premium.
Your insurer could be creeping on your social media
Recently, the state of New York made it legal for insurers to use social media information to determine premiums. That raises concern because it can lead to discrimination when underwriting policies.
Also, creeping on a client’s social media is a breach of privacy. Your social media accounts should be sacred, and no one should use that information to judge you one way or the other.
Despite the above instances that clearly show that insurtech brings with it huge privacy concerns, the benefits it brings guarantee that it is here to stay. However, it is important to realize that the trade-off is your privacy and the security of your data.