Sleep, Wearables and the Future of Underwriting

By Insight.

Data, data everywhere but how do we avoid sleepless nights wondering what to do with it all?

Insurers worldwide are grappling with the increasing volume of data available in many markets. This includes new data fields and the degree to which data can be used to enhance traditional insurance products and risk management. Automated underwriting and using data to accurately track individual risks and improve mortality and morbidity over time are at the forefront of many of these emerging changes.

Recent developments in sleep science have highlighted that sleep may be one of the most important metrics available to insurers. Not only is it one of the three pillars of health but, it is also the foundation on which the other two pillars, exercise and healthy eating are built[1].

[1] Walker, Matthew. 2018. Why We Sleep. Harlow, England: Penguin Books.

Studies dating back to 2010 already illustrated the risk of both too little sleep (those who slept for 6 hours or less per night had a 12% increase in mortality) as well as too much sleep (those who slept for 9 hours or more per night had a 30% increase in mortality)[2]. New research further indicates that most sleep studies miss the important relationship between ill-health and sleeping durations. Short sleep durations can be the cause of ill-health but longer sleeping durations are more likely a consequence of undetected underlying pre-existing ill-health.

[2] Cappuccio, F., Strazzullo, P., D’Elia, L., & Miller, M. (2010). Quantity and Quality of Sleep and Incidence of Type 2 Diabetes. Diabetes Care, Volume 33, Number 2, February 2010, 414-420.

Sleep duration can thus be both a cause and effect related to increased risks

The incorporation of sleep data with other data fields could enable insurers to have both a warning light and powerful behavioural nudge that they can use to assess the overall health of individuals, and provide mechanisms to improve their quality of life and mortality risks.

Technological advances in modern wearables have made sleep data readily available to both insurers and policyholders. For insurers, the ability to access consistent and reliable data about the sleeping patterns of policyholders will prove to be extremely valuable. In particular, life insurance pricing using traditional methods and data is becoming largely commoditised and the use of more relevant rating factors may provide insurers with an advantage over those using traditional methods.

Elevate Life[3] provides an example of how this can be done in practice. Elevate is a new-generation life insurance provider at the intersection of life insurance, healthcare, and holistic wellness. Elevate Life policyholders can share their wellness data through the ElevateMe web application which in turn provides them with usable information like monthly wellness goals and actions. Achieving goals is incentivised through rewards like cashbacks on a monthly basis. This enables Elevate to support their members in achieving a better state of health through providing personalised behavioural nudges and mechanisms aimed at a better quality of life and lowering mortality risks.

[3] https://www.elevate.co.za/

Sleep is also one of the easier patterns to improve and, if optimised, could yield significant value in both absolute longevity and quality of life.

This combination of biological importance, availability, trackability and the potential benefit to consumers makes it one of the most interesting and exciting potential new rating and risk management factors. As Marissa Mayer, former Yahoo CEO stated, “With data collection, ‘the sooner the better’ is always the best answer.”

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 insight.co.za | lifesolutions@insight.co.za

[1] Walker, Matthew. 2018. Why We Sleep. Harlow, England: Penguin Books.
[2] Cappuccio, F., Strazzullo, P., D’Elia, L., & Miller, M. (2010). Quantity and Quality of Sleep and Incidence of Type 2 Diabetes. Diabetes Care, Volume 33, Number 2, February 2010, 414-420.
[3] https://www.elevate.co.za/