Buying a Health Insurance or Motor Insurance Policy? Now, Only Pay for Your RiskOne of the biggest advantages of technology is that it allows organizations to parse through reams of data to better understand the customer and create customized solutions

雷努和Sangeeta是两个30岁我们的女人rk at the same company. Renu is very health conscious. She regularly exercises and uses a health app to count her daily intake of calories. Sangeeta, on the other hand, feels that just because she is young, she can be carefree about her food habits and exercise regime. Both of them are currently not suffering from any illnesses though Sangeeta is a tad overweight. In a conversation about having recently bought health insurance, Renu discovered that she had paid the same premium amount as Sangeeta for a similar sum assured. Renu thought that it was highly unfair that the premium she was paying was the same as Sangeeta, even though she was more health conscious and thus more likely to be fitter in the future. Do you think that Renu is right in feeling affronted?

She is indeed correct. Each individual is unique and risks that s/he carries are also exclusive. In the above case, when the insurance company had to decide on the premium amounts for Renu and Sangeeta, it put both of them in same risk bucket basis their age, current illnesses and some other generic data. Instead, by looking at more granular data such as eating habits and exercise regime, the insurance company would have probably concluded that Sangeeta possesses a higher risk compared with Renu. Accordingly, the premium paid by Sangeeta would have been higher than that paid by Renu.

Stay Fit To Reduce Insurance Premiums

One of the biggest advantages of technology is that it allows organizations to parse through reams of data to better understand the customer and create customized solutions. In the health insurance space, the data gleaned from wearables can play an integral role in deciding an individual's health insurance premium.

Generally, insurers only have access to point-in-time data through medical tests or self-disclosures. This data is static in nature and is often not sufficient to provide an adequate risk assessment on an ongoing basis. In 2016, India's health insurance regulations passed a resolution to allow insurers to reward customers on the basis of health and fitness parameters.

Following this, some insurers in India have introduced fitness features and premium discounts related to customer's overall health. For example, a leading health insurance player has collaborated with a healthcare start-up to track the health score of customers based on which they get discounts on health insurance premiums. Another Indian health insurance company is leveraging the predictive power of artificial intelligence (AI) to assess the previous year's claim activities and hospitalization data to offer wellness benefits that encourage customers to stay healthy.

Technology such as wearables, data analytics and AI is allowing insurers to get up close and personal with their customers so that they can offer them the most optimal solutions. In this case, premiums that are priced to reflect their personal risks.

Safe Drivers Pay Less

Similarly, in the general insurance space as well, technology can help insurers assess risks and price premiums in a more optimal manner. Take for example the motor insurance space. Currently, most motor insurance providers price policies based on factors such as the insured declared value of the vehicle, make and model, engine capacity and the geographical zone of the vehicle. Preferably, driving habits should be one of the key factors to consider when assessing risk and determining premiums for motor insurance.

Telematics can be used by insurers to capture and monitor data related to driving habits and many countries such as China, Germany and Singapore already leveraging this technology to better price motor insurance premiums. It is simply a method of monitoring an individual's vehicle through a global positioning system (GPS) device fitted in an individual's vehicle. The device monitors and captures data related to an individual's real-time driving habits and consequently can help in determining the amount of motor insurance premium he/she will have to pay. Safe drivers can be incentivized by lower premiums, while risky drivers can be deterred through higher premiums.

根据保险监管和发展ent Authority of India's draft proposal, a central repository of telematics data can be created where data from various sources flows to create a common pool. Insurers can then use this pool of data to delink proxy data from source data, thereby, enabling them to provide pricing that rewards safe drivers. There are also companies overseas that are leveraging AI-based devices for creating a dynamic pay-per-mile underwriting system to monitor miles, jerks, collisions, speed patterns, etc. This data is then used to calculate the insurance premium.

At a time when customers have come to expect customized solutions, pricing premiums to reflect an individual's unique risk has become imperative. Technology is allowing insurers to assess and monitor risk on an individual and real-time basis, thereby, helping insurer's price premiums more accurately and keeping their customers happy.