Life insurance

I had a beer with a life insurance actuarial expert the other day.

He was describing to me how they are using more and more data to create personalised life insurance premiums.

I suggested to him, jokingly, that they put an app on a smartphone and then use this to monitor smartwatch-measured vital signs in order to monitor health risks in real time and adjust premiums accordingly. He really loved this idea and is ‘onto it’.

I always thought insurance was about sharing the risk between groups of people. This is apparently not the case anymore; the insurance industries are determined to price insurance according to individual risk factors and only cover us for known probabilistic events.

By understanding us in detail they are entirely removing their risks of business failure.

In which case, I pointed out, people on the right hand side of the risk Bell curve may as well self insure. And then half the people on the left hand side would then be compelled to do the same, and so on.

You have to think that this is one industry that really needs disintermediating.

If there ends up being no risk then there should be no profit either.

At the very least a crowd sourced people-free version of insurance would cut out a lot of unnecessary operating costs that are passed onto us consumers.