Case study

Usage-based insurance (UBI) is a type of automotive insurance that uses technology to measure how, where and how far a vehicle is driven. UBI is powered by plug-in devices or mobile applications, and provides insurers a range of data, including how drivers are braking and accelerating, where they're driving, and length of time behind the wheel. The data collected gets sent to the insurance company, which keeps track of the user's driving behaviour. The data is used to assess the risk profile of a specific driver in order to reward safer drivers with discounts on their insurance. Other benefits for drivers include that devices can call emergency assistance automatically and instantly when they detect an accident, based on critical information, location, or if the driver pushes a button. In recent years, the UBI market has grown exponentially. It is expected to garner US $123 billion by 2022.

Fast forward to 2023. Inspired by the success of UBI in auto insurance, your company has developed a health insurance product for the Australian market, based on the same principles called 'Your Health +'.You have developed a mobile app that keeps track of the user's activity and location throughout the day, and allows users to record their nutrition, stress data, heart rate, and sleep. The app includes an inbuilt algorithm that uses lifestyle data to assess the health risk profiles of specific customers. Combined with the medical information based on each customers' claim history, the level of insights this data provides is unprecedented. Because of this, you are able to reward customers who have a healthy lifestyle with discounts of up to 50% on their insurance premiums.As data is processed in real-time, when people improve their lifestyle, additional discounts are applied, thereby encouraging customers to live healthier.

None of your competitors is currently close to releasing a similar health insurance product, and you have turned the health insurance market upside down, attracting customers with a healthy lifestyle from all across Australia. As a result, competitors have had to raise their insurance premiums, further widening the gap in insurance premiums.

Based on the success of "Your Health +", your company now has plans to extend the product by allowing people to link their smart fridge, smart toothbrush, smart bicycle, and other smart devices to the mobile application. This will allow you to make even more accurate predictions about the health risk profile of specific customers, and you will be able to offer customers with a healthy lifestyle even larger discounts on their insurance premiums. Other benefits for customers are that the application provides personalised health suggestions as well as products and services that can help customers live a healthier lifestyle, and is able to alert people when they are at an immediate health risk.

Despite the commercial success, there has been strong criticism from consumer interest groups. In particular, the Australian Information and Privacy Officer has also expressed concern about the privacy of customers and the effects this product will have on the Australian private health insurance market. Public sentiment about your company has been very negative, and parliament has been floating the idea of regulating personalised health insurance.

Your company doesn't really agree with these concerns because participation by customers is voluntary, consent based, and you are transparent with what you are doing with the data. However, to appease the negative sentiment, you have invited a group of representatives from the Australian Information and Privacy Office to discuss their concerns. Your interest is to adapt the product in a way so that privacy concerns are addressed, but without compromising profitability.

Your task

During the meeting, present your responses to the following questions.

• How does "Your Health +" offer value to customers and society in general?
• How does it comply with Australian privacy regulations?
• What do you think are the most important concerns for consumers and the Australian Information and Privacy Officer?
• How could you adapt "Your Health +" to relieve privacy concerns?
• How would you be able to balance privacy concerns and revenue?