Consumers should be “concerned” with how their data could be used as a Canadian-owned insurance company ceases traditional policies in favour of plans that track customer activity, according to Ontario’s former information and privacy commissioner.
“The problem is that it’s endless tracking,” said Ann Cavoukian, the head of Ryerson University’s Privacy by Design Centre of Excellence, in a phone interview.
“You can rest assured that there will be an increasingly wide swath of people and corporate entities who will have access to this data. And it’s very personal, sensitive data that, in the wrong hands, could come back to bite you,” she said.
John Hancock Financial’s decision last month to offer only interactive life insurance policies — a plan that analyzes fitness and health data through wearable devices and smartphones — could leave customers vulnerable to data leaks and breaches, Cavoukian said.
“People are going to feel compelled to do this. They’re going to think, OK, I’m going to save money and it’s a good thing and what’s the big deal,” Cavoukian said. “But I don’t think they realize the implication in terms of the tracking and surveillance potential that will happen with their data.”
The Boston-based financial services and insurance provider, owned by Manulife Financial Corp., offers a program called Vitality. This program rewards customers for hitting exercise targets tracked by devices such as Fitbit and Apple Watch and logging healthy food purchases.
Even with growing public awareness of cybersecurity after the Facebook data breach, some consumers are still willing to give away their data for convenience. The healthier, and less risky, the profile, the more the customers saves.
The policy is a stark shift from traditional plans that periodically require customers to complete medical tests and provide background health information.
“There are endless trap doors that lie ahead,” Cavoukian said, adding that as analytics and tracking technology evolves, people “won’t be able to get out of it once they’re in it.” To avoid the this, she says that key questions need to be asked about the service around how the data is being used and with whom it is being shared.
The program, which launched in 2015 to customers in the United States, was developed to incentivize people to make behavioural changes that could lead to healthier lives, the company said in a release.
“We have smartphones, smart cars and smart homes. It’s time for smart life insurance that meets the changing needs of consumers,” said Brooks Tingle, president and CEO of John Hancock Insurance. “We believe this is the future of our industry, and I encourage other insurance companies to follow suit.”
John Hancock did not provide information on cost savings for the company or the effect on claim payouts. However, it did say that Vitality policyholders live 13-21 years longer than the rest of the insured population.
The move is a significant benefit to the company, according to Moshe Milevsky, a finance professor at York University’s Schulich School of Business.
“That’s what drove the decision – it’s about cost savings and maximizing the bottom line,” he said in a phone interview. “I do not for one moment believe that this was done by any company simply because they felt this was for the good of society.”
The Vitality program brought in US$20 million in sales in Q2 — the highest sales quarter since the company launched the policy.
The policy change could also be an effort to attract a younger demographic that typically associates life insurance with their grandparents, Milevsky said.
“What do I need this for? I’m young and I’m healthy,” he said. “So maybe by presenting this as something that becomes cheaper the better you take care of yourself, they’ll get into a demographic that they wouldn’t have appealed to before.”
John Hancock joins the trend of insurers adopting new technology to track behaviour and determine cost. In June 2017, Toronto-based Intact Financial Corp. launched an auto insurance policy that uses an app to monitor driving habits and reassesses premiums based on the data.