Insurers and Privacy: Many Americans are Quite Happy to Share Their Daily Data

In Europe, data privacy is taken very seriously. The new EU General Data Protection Regulation (GDPR) will be enforced in just a few months. It significantly tightens the rules around how permission to collect data is obtained and ensures that people can get copies of their data, that they can ask to have their data deleted and that they are notified if there is a privacy breach.

In America, data privacy is much more relaxed. No such legislation is being planned and the laws that do exist are a patchwork of state and federal laws. In fact, early in 2017, President Trump repealed a law that would have required internet providers to obtain consumer consent before using precise geolocation, financial information, health information, children’s information and web browsing history for advertising and marketing.

It is very much the Wild West of data privacy. But, for many Americans, that’s fine. They are not only willing to allow companies to collect their data, they will purposefully give it to them — even when it involves things like their health and the way they drive.

MoneyScreen benchmarks and tracks innovation across all aspects of the financial services and insurance industries and provides access to well-profiled consumers for ongoing concept development and testing. In conducting our ongoing MoneyScreen research, we have tested hundreds of concepts, including many ideas for insurance offers which involve collecting detailed personal data about everything from what you eat, to how fast you drive.

We noticed that these ideas typically test as well as any other idea, indicating that concerns about privacy are not a deal breaker. In fact, they are quite attractive to some.

Watch me

One idea we tested was a health insurance reward program that would pay for an Apple Watch if you reach healthy goals over the course of a year. You have to buy the watch and download an app. Points are awarded for consistent exercise, preventative care visits, the use of urgent care clinics, etc. Once you accumulate enough points, the insurance company reimburses you for the watch. The app also provides education, encourages compliance with medications, allows members to manage their accounts and pay bills through Apple Wallet.

Interest in this program was very much the same as interest in more traditional health insurance that do not include monitoring of people’s health behaviors. This confirms that, for many Americans, sharing data on what they do is of no real concern.

Beep, beep, yeah

Another type of insurance idea we tested was a device that monitors your driving. It rewards you for safe driving behavior by lowering your insurance rate. It works by plugging a telematics monitoring device into a port under your dashboard. It records where you drive, how fast you go, when you go and how quickly you accelerate and break. Agents and customer service representatives can see your speed, when and how far you drive and how you brake.

In return, if you: “Watch your speed, don’t drive too much, drive at safe hours and make safe stops,” you are rewarded with lower insurance rates and the ability to view how you’ve been driving.

We found that interest in this offer was very much in line with interest in other auto insurance offers that gave people discounts for having safe driving records — without monitoring their driving minute by minute. The need to share detailed driving data is clearly not a deterrent for many.

Better models and healthier clients

Insurance has always been a data-driven industry, but there is quite a difference in modeling costs in the aggregate versus being able to have second-by-second data on the behavior of a single customer. This can greatly increase the accuracy of the models, which opens the door to greater profitability.

When people know they are being monitored, they are more likely to make positive choices and engage in the kind of activity that gets rewarded. This gives insurers a win, win scenario. Better models and safer, healthier clients.

Our MoneyScreen testing indicates that insurers have a green light to aggressively develop offers that include giving up a great deal of privacy. Many Americans are not just okay with it, they are ready to sign up!

This look at insurance is just one small element of recent learnings from MoneyScreen, our ongoing study of more than 30,000 Americans and financial services innovation. To learn more, check out these articles on biometrics and mobile wallets, robo-advisors vs. human wealth managers and payment innovation.

To learn even more, engage with our team, who are pioneers in mapping the ever-changing financial services landscape, and hear about the trends and stories that we are uncovering. Just contact us to arrange a meeting.