Wearable technologies won't wash! This article was originally commissioned for the January 2018 edition of the Actuarial Post. The key to developing good protection products is to have a strong underlying base of data from which to deduce what the correct rates should be. This allows the life assurers to provide the maximum protection for the consumer without bankrupting themselves. Traditionally, this comes from large data sets assembled by experts giving broad categories into which the consumer was placed. The resulting calculations enabled accurate estimates to be made, assuming the sales to each broad category were sufficiently strong. The advent of new technology, in the form of wearable technology such as watches and wristbands that measure exercise and vital signs, was supposed to bring about a new era of personal life assurance.
Every few years, there’s a flurry of interest in the financial media in income protection. There are strong recommendations from experts on how it can play a big part in providing financial security for families, what good value it is and how high the claims payment rates are. Then it quickly fades away again and Income Protection gets put back on the shelf.