UK Edition
Health insurer bribes customers to exercise with an Apple Watch
A health insurer has become the first in Britain to bribe people to exercise in return for a smartwatch – but customers tempted to cheat on their daily quota are warned that they could be committing insurance fraud.
Vitality has signed a deal with the technology giant Apple that it hopes will tap into Britons’ growing taste for tracking their own movements and nutrition through wearable gadgets.
While the health benefits of such self-monitoring are still being debated, the popularity of wearable devices such as Fitbits is soaring. Over 3m wrist-worn smart devices were sold in the UK in 2015, according to Mintel, more than doubling in a year despite 51pc of Britons expressing doubts that wearable technology would change their daily routines.
Vitality plans to sign up its insurance customers to an Apple Watch for a deeply-discounted £69 each with the proviso that they “earn” the rest of the £369 purchase price by reaching exercise goals over a 24 month period.
To avoid a penalty charge, users must walk at least 10,000 steps every day, or undertake more vigorous exercise on 20 days a month.
Customers who decide to lend their watch to someone more active to fulfil their quota could be accused of insurance fraud. “It’s like telling the insurer you’ve got a two-bed house, and then when it burns down it turns out it had six bedrooms. At the very least it’s enough to invalidate your claim,” said Andrew Kail, UK financial services leader at PwC.
“Individuals who want to take advantage of this probably think they can get a better deal and expect to benefit. But it’s a different story if they’re going to put your premiums up. You start to get different levels of insurance risk – you see that in telematics for drivers who allow insurers to access their driving data."
A spokeswoman for Vitality said “the vast majority” of its existing customers who log their activity to earn rewards do so within the rules. “There are always going to be a few people who try to cheat any type of system. However, our experience is that abuse of the Vitality Active Rewards benefit is very rare and we monitor it to ensure that a few people do not spoil it for the majority,” she said.
Apple, which is hoping to revive sales of its watches with the recently-launched Apple Watch 2, is building on a partnership it signed last year with Vitality’s South African parent company Discovery.
“The relationship with Apple is symbiotic. We can’t develop the technology at the rate they do, and I’m not sure they would have the requisite understanding of the insurance risk,” said Vitality chief executive Neville Koopowitz.
Several technology firms including Google have previously tried to harness their wealth of personal data to challenge traditional insurers, although Mr Koopowitz sees the overlap as more of an opportunity than a threat. “One can’t say they would never enter the marketplace, but it’s a complex field,” he said.
Vitality has also penned a deal with Ocado to offer online discounts of up to 25pc on goods that the two firms pick out as healthy, in an attempt to steer customers into more virtuous shopping habits - and eventually lead to lower health insurance claims.
“What we have come to realise is we’ve seen people changing their eating behaviour if they get discounts. There’s a perception that healthy eating is expensive and that’s a barrier, as is impulse purchasing," said Mr Koopowitz.