Strap on the Fitbit: John Hancock to sell only interactive life insurance
reuters.com
reuters.com
I think insurers should distinguish between controllable and non-controllable factors, and they should not be permitted to discriminate on the basis of non-controllable factors. For instance, if someone chooses to ride a motorcycle instead of drive a car, then there should be a premium for that policy. However, if someone is born with a genome that predisposes them to dying much sooner from a specific disease, they should be charged no more than anyone else, because you can't control your genetics.
I doubt most companies would willingly take the initiative on this though...
With regard to the article's point, not everyone is able to exercise effectively to keep themselves in shape. People with disabilities are not necessarily able to go for a run and should not be penalized financially for being unable to do so.
Risk-taking behavior, such as choosing to ride a motorcycle, can also be influenced by genetics[1]. How can insurers distinguish 'free will' from genetic disposition?
A "biological bias" might make the choice harder, but they're not suddenly deprived of free will.
Regrettably, people who write company policies and federal laws aren't always so ready to admit their own ignorance.
Giving resources to people according to their needs is not really insurance’s role. It may be done through taxes, it may be done through “insurance” but then it is not insurance anymore.
The model you described must be regulated by government. Examples: health insurance (by state) and mandatory car inssurance (by every player on the market) in EU. Each inssurance company must insure every car for a fair price - fairness is regulated by the state.
“Fairness” is difficult to define. For example, women paid less for auto insurance in many European countries until the EU decided that this was illegal discrimination.
However if you do want to fix this, you can’t do it as an insurance company. Let’s pretend you try - we’re going to charge slightly more than accidental death premiums to everyone. That is - we’re going to blend the health risk into one big number and slather it over all our prices. The problem becomes the free market. Consumers that want life insurance will pick the one with the lowest price. If you’re someone healthy - that means you’re going to skip this new equal opportunity company - it’s more expensive for you! You can get cheaper insurance if someone reviews your medical history and you probably are ok with them doing that. Now on the flip side - if you have a disability, you definitely want this cheap product - it’s cheaper by 10-20x than anything else in the market! So now your pool that you’re spreading risk across is 90-95% high risk and you can’t spread the risk so you can’t even pay out claims - there’s just too much risk for the net premium you are collecting. You’re basically creating a “disability life insurance” and your premiums should have been (to break even) nearly as astronomical as any other company.
For reference, you can currently buy accidental life insurance - it explicitly excludes death due to health conditions. It’s a relatively bad product since most companies will dispute claims - if you have a car accident and die while in the hospital with a heart attack, they will try to prove that you had a heart condition. It’s one of the ways regulation works correctly otherwise - after 2 years with a normal life insurance product, the company is required to pay, by law, even if you lied or omitted something when applying.
Unfortunately in insurance you need regulators to do things like these. It’s why the ACA was required for health insurance. It’s a race to the bottom that no company can stop. Furthermore currently regulations make it very hard to compete on anything except price so there’s nothing you can do to sweeten the pot for the healthy risk to balance the unhealthy risk.
Disclaimer: I’m an engineer at a company that sells life insurance. These are my own opinions though.
It seems to me that if people don't collectively pay extra for people with disabilities or chronic illnesses, then a lot of those people would suffer and/or die young.
Surely contributing to that situation would be far more immoral? Is the freedom for people to spend all of their money as they like really worth more to you?
This might be arguable if everyone lived in well-separated domains where there is no significant risk of fire spreading from one to another, but that is not the case for the vast majority of people.
If your morality doesn't work in the real world, it's not a good one.
You can argue that in certain special cases, like in the fire department scenario, you personally believe that theft is morally defensible from some perspective. But then you are not really basing your moral standpoint on any principle, but taking things on a case by case basis, and you end up in a situation where you can essentially always argue that using force is right.
There is a competitive market of jurisdictions, offering different prices and products. Jurisdiction A includes trash pickup, which you might want because reducing fly tipping increases property values. Jurisdiction B has no trash pickup but low, low prices.
People who want B but who buy A instead can hardly complain that A isn't B - any more than a person who buys wine can complain it's not beer.
First time I've seen that line, and it doesn't make much sense to me at all - in my mind insurance has always been a hedge against risk. If my family needs a million dollars to live well if I die, and my probability of death this year is 0.1%, $1000 is what I'd pay for life insurance. The art is calculating the probabilities correctly, and maybe adding a small fee for the trouble, but anyone with the capital could offer insurance even for a single customer, no?
Actually, that is essentially how an insurer gets started. Obviously, you can't start selling insurance to your first customer if you can't pay them out the next day if needed, so you need some capital to get started. And once you have the risks figured out, there really is no reason why you shouldn't keep selling insurance to the next ten customers as well. And the next thousand customers. And the next ... --well, the point being, if you have done your math right, you are now distributing the risk evenly, with some profit margin for you.
[1] We need legislation to make the practices illegal, or hold these people accountable, not in the least in case of data breaches. That's just the top of the iceberg.
I'm skeptical here. This data point suggests to me "Rich people who can afford cutting edge technology and who also probably have been well cared for their entire lives naturally live longer and are the early adopters of this type of insurance involving fitness trackers. From that, we are extrapolating that fitness trackers cause longevity." It's a tail wags the dog type inference.
Also, when I was in insurance and they had a wellness benefit on policies, I was initially jazzed that they were moving in the right direction of promoting preventive medicine, yadda. Then I learned that the actual point of the wellness benefit was that it gave people a small payout annually and this improved customer retention. That's it. Actual welfare of the customer had nothing whatsoever to do with it.
Disclaimer: I worked in insurance for over 5 years at a highly ethical company and ended up with a pretty negative opinion of the industry as a whole.
From the horse's mouth:
| John Hancock Vitality Life Insurance now offers new and existing* customers two options to support and incentivize healthier choices, wherever they are in their wellness journey:
| Vitality GO: Vitality GO will be offered on all life insurance policies, at no additional cost. With this basic 'be healthy' version of the program, consumers will have access to expert fitness and nutritional resources and personalized health goals through an easy-to-use app and website. And as they reach key milestones, their healthy activities will be rewarded with discounts at major brand outlets.
| Vitality PLUS: For $2.00 a month 5, customers will receive all the benefits of the John Hancock Vitality Program, including savings of up to 15 percent on annual premiums and valuable rewards for the everyday things they do to stay healthy, like exercising, eating well and getting regular checkups.
https://www.johnhancock.com/news/insurance/2018/09/john-hanc...
Correct article title is here: https://news.ycombinator.com/item?id=18027323 "John Hancock will include fitness tracking in all life insurance policies".
And with that, reuters.com enters into my HN blacklist.
It would of course be pointless to have a fitbit if you cheat, so in practice it is going to be a small number of steps that miscalculated, so it is fairly accurate, but that changes once I get a bonus for hitting 10k steps.
0) Heart disease, not obesity, is the number one killer in america. There is not a particularly strong correlation (certainly not = 1.0) between heart disease and obesity, diet, or even exercise.
1) There is very, very little correlation between exercise and obesity.
2) The systemic origins of obesity are not well understood, certainly not well enough to declare "ethical and fair" any kind of punitive mechanisms.
3) Your argument appears to be steeped in Puritan ethics which are unsupportable given modern science and medicine about the nature of free will, how the biology and physiology of the mind affects heath outcomes, and even the effectiveness of punishment as a generator of "good" behavior.