A report from the British research firm Timetric suggests that wearable technology will revolutionize the health insurance industry.

photo_web_1699The author of the report, Jay Patel, an analyst with Timetric, notes that sensors in wearable technology can monitor such things as breathing patterns, heart rate, body mass index, and stress levels. This offers insurers information about health risks that is based on actual behavioural patterns rather than probability.

"Insurers generally calculate premiums based on estimates, but using wearable devices clearly increases the validity of insurers’ calculations of risk," reads the report. "As wearables - such as wrist bands, wrist watches or glasses - capture the relevant data from the wearer, insurers can trust the data and use it to gain valuable insights about the customer."

Having obtained this kind of specific information, insurers can then use it to encourage policyholders to lead healthier lives. For example, the report notes that the American life insurer John Hancock released an Apple Watch app which allows customers to record their activities and receive a discount of up to a 15% on their annual premiums.

"Although wearable technology is still in its nascent stage, the evolution of these devices – ranging from fitness activity tracker bands to digital pills – will likely help health insurers to measure risks more accurately, which has positive implications for the profitability and efficiency of health insurance companies," concludes the report.