Health Wearables Offer Incentives, Not Meaningful Premium Cuts

In India, premiums tied to wearable devices are currently undergoing trials and have not yet proven to be a viable means of lowering overall insurance costs. Nevertheless, they create incentives for users to engage in healthier behaviours as well as provide insurers with better visibility into the true risk profile of a policyholder in real time.

Why Premium Cuts Remain Modest

However, in India, wearable-linked insurance is still largely in the pilot/reward-based stage and small premium discounts rather than real price cuts. “In many cases, they work more as a risk-filtering tool, where fitter customers benefit while others may see limited or no reduction in premiums. These programmes aim to encourage healthier habits and insurers are currently cautious about using wearable data to make major pricing changes,” says Anita Teli, Chief Compliance Officer, Probus.

There is a delicate balance between using the data produced by wearables to enhance underwriting accuracy versus using that information as a mechanism to determine who pays what for insurance based solely on their recent activity levels.

“If implemented properly, wearables have the potential to allow for the long-term sustainability of insurance premiums. However, the insurance industry must avoid developing models that would ultimately transfer an excessive amount of risk and/or create an excessive burden for individuals based on their current physical activity levels,” says Arun Ramamurthy, co-founder, Staywell.Health.

Using Wearable Data Responsibly

As insurance companies experiment with activity-based underwriting, having proper safeguards in place is key to ensuring equity and mitigating any unintended biases.

“As fitness-based pricing is still evolving, clear regulatory rules are vital. Wearable data should be used to reward healthy behaviour, not to penalise people. Clear rules around consent, limited use of data, and transparency in pricing are essential to prevent discrimination or unfair premium changes,” says Teli.

Clear parameters around consent, data minimisation, AI transparency, and non-discriminatory pricing will help build and maintain consumer confidence in this new way of underwriting. “Regulatory audits performed periodically along with grievance redressal mechanisms and limitations on the granularity of how behavioural data can impact pricing are also critical aspects of the long-term success of this new method of designing and delivering insurance products,” says Ramamurthy.

There should be opportunities to use wearable technology data to encourage a healthier lifestyle and enhance the predictability of claims activity while providing assurances that no customer will be penalised for factors that are outside their control or based on varying levels of accuracy of data from the devices they use.