The IRDAI has formed a working group on innovations, particularly the application of wearable and/or portable devices in insurance.
Insurance companies have suggested that usage of these devices should lead to benefits, such as a discount on premiums, being offered to policyholders, reported Moneycontrol.
The working group will look at how technological advancements, particularly wearable and portable devices, may be treated from the point of view of risk improvement, risk assessment and use/distribution of such devices as part of policy design.
Further, it will understand the practices of other jurisdictions in this area and suggest the policy framework that needs to be put in place, keeping in view the interests of policyholders.
“Currently, we put all policyholders under one bracket irrespective of what their fitness levels are. Hence, we have suggested that individual health metrics also be measured and differential pricing be offered,” said the chief executive of a large life insurance company.
At present, mortality tables are used by life insurance companies to look at the premium that would be charged for each age bracket of customers. Insurers also either require the policyholder to undergo a complete medical examination or rely on the disclosures given by prospective policyholders.
The IRDAI has said in the context of both health insurance and life insurance, wearable devices could be used to measure personal fitness, incorporate a healthy lifestyle, among others. In motor insurance, recently the IRDAI had put up a discussion paper on the application of telematics.
“Innovation is encouraged, but policyholder interests and how exactly the products will be designed need to be looked into. Proper data will have to be analysed,” said a senior official.