Today, insurance companies charge a premium that is based on the age and health-risk profile of an individual.
Imagine a scenario where two individuals A & B, of the same age with a similar health-risk profile, buy the same insurance plan, both, A & B are mildly diabetic and have a similar blood sugar reading (at the time of the commencement of a Life Insurance Policy) then, both are charged the same premium. However, individual A complies better with the treatment drugs and recommended dietary restrictions, individual B does not comply as well. Consequently, A’s blood sugar levels are much more in control than B’s. Obviously, B is a higher risk for the insurance company, but under the current insurance plan, both will keep paying the same insurance premium.
Proposed Scenario in light of the Internet of Things
Now, imagine, if the insurance company had a system of recording both, A’s and B’s Blood sugar, on a regular basis and capture that information on the cloud, they would know the compliance levels of both, A & B, and also the increased risk levels of individual B. . In such a case, ideally, individual B should be charged a higher premium than what A pays. Today, we have numerous non-invasive (wearable) devices for checking these health parameters. I propose a solution, where such devices could be synched with mobile phones and regular readings of the individual’s different health parameters such as Blood sugar level etc. could be uploaded on a cloud server owned by the insurance company. The insurance company could keep a track of the compliance and risk levels of its customers and introduce variable premium insurance plans (charging B more than it does A, in the above scenario).
It’s a Win-Win situation:
If such a system existed, not only would the risk come down for the insurance company, but it would also incentivize customers to maintain a healthy lifestyle complying with drugs, dietary restrictions and exercise. It would ensure customer delight and in effect increase the insurance company’s market share.
This is the N=1 concept (propounded by late Prof. CK Prahlad) in action.
Win-Win situations in business don’t get better than this .