How Wearable Devices Will Impact Insurance

By: williamjones
January 5, 2015

By: Morgan Smith

Fitness bands. Google glass. Smart watches.

These are just a few instigators in a global trend that’s taking wearable technology devices from personal lives into the workplace—and bringing with it the potential for liabilities previously unconsidered.

“What we’re seeing is the development of the technology into consumer-oriented products,” says Mike Heembrock, workers comp and commercial auto loss control specialist at Chubb. And although “we’re in an awareness development stage right now,” employees are already beginning to use wearables at work—and some companies are taking advantage of their capabilities to improve safety, collaboration and efficiency.

According to a survey conducted between human resources software and services company Kronos and Harris Poll, 48% of Americans believe wearable technologies could benefit the workplace—but only one-fifth have experience using a wearable device for work-related activities. As these devices become more integrated into everyday workflow, potential for loss of company data and personal information is becoming a threat.

For agents approaching a client who is either already using or considering these devices at home or in the workplace, Heembrock advises starting with general legal questions and understanding the potential pathways that could lead to loss of data. “You need to look at how the wearable is being used, how critical the information is and what purpose the wearable device is serving,” he says, adding that liability arises from heavy dependency on its collected information.

“I think the logic to sort through the liability is similar to the logic you would apply to products liability for other diagnostic medical equipment,” Heembrock says. “Employers need to be conscious of their presence and apply a risk assessment to answer questions about whether to use or not to use wearable devices, and what policies and procedures might need to be adopted to make sure they’re not underused, overused or used inappropriately.”

Despite worries about privacy and data security, 31% of Americans have no concerns about using wearable technology in the workplace—so expect the trend to become more permanent this year.

Morgan Smith is IA assistant editor.

Are You Wearing an Insurance Discount?

A PwC report reveals that wearable devices will have the biggest impact on the entertainment, media and communications, health, retail and technology industries.

Results show 68% of consumers would wear employer-provided wearables that stream anonymous data in exchange for a break on their insurance premiums. In some companies, “the employer is actually promoting or interfacing with wearable devices for health promotions,” says Heembrock, who marks company incentives as the next stage of this trend.

The overwhelming majority (77%) who assert potential for more efficient and productive work with a wearable devices also say their company should fund wearable technology (46%). “I think smart employers are looking around and getting a sense of how their employees are using this technology for the employees benefit,” Heembrock says. —M.S.