WTW and Klarity Collaborate to Boost Insurance Underwriting Accuracy by Harnessing Wearable Health Technology

In this iPMI Global breaking news article, we look at the new strategic collaboration between WTW, a prominent global advisory and solutions company, and Klarity, a UK-based health data analytics firm. Their joint effort focuses on revolutionizing life insurance underwriting accuracy by integrating wearable technology and health data into the assessment process. This initiative aims to provide more personalized and precise risk evaluations for individuals, moving beyond traditional metrics to incorporate real-time health insights like heart rate and sleep patterns, leading to fairer pricing and enhanced customer engagement within the insurance industry. The collaboration also highlights WTW's broader offerings in people, risk, and capital solutions across various industries globally.

Key Themes

Innovation in Underwriting: The integration of real-time health data from wearable technology into traditional life insurance underwriting processes.

Improved Risk Segmentation and Pricing Accuracy: Moving beyond static, traditional metrics to more dynamic and individualized risk assessment, leading to more precise pricing.

Enhanced Customer Experience and Engagement: The potential for personalized pricing to foster greater transparency and loyalty with policyholders.

The Rise of Wearable Technology in Health Data: Acknowledgment of the growing adoption and utility of smartwatches and fitness trackers in providing actionable health insights.

Most Important Ideas/Facts

Addressing Limitations of Traditional Underwriting

Traditional mortality risk measures (e.g., cholesterol, BMI, tobacco use, family history) often “misclassify applicants because they only provide part of an individual’s health profile and fail to spot important individualised measures such as resting heart rate, heart recovery rate, sleep and activity versus inactivity levels.”

These static measures provide an incomplete picture, leading to inaccuracies in risk assessment.

Klarity's AI-Driven Risk Scoring Tool

Klarity has developed a new risk scoring tool built on “12 years of health data spanning over six million life years.”

This tool generates “individual-level mortality scores to predict and classify risks” by incorporating “third-party data obtained from smartwatches and other wearable devices that track physical activity, heart rate and sleep patterns.”

Validation and Efficacy of the Model

WTW's collaboration with Klarity included testing the model's efficacy using U.S. data from the National Health and Nutrition Examination Survey (NHANES).

WTW’s analysis found that “Klarity’s model can more clearly identify individual mortality risk profiles, enabling improved risk segmentation and insurers to align pricing more accurately than traditional underwriting metrics alone.”

Examples of Improved Risk Identification

The model can identify “residual non-smokers [who] actually had risk profiles similar to risks classified as preferred and, in some cases, best preferred based on traditional criteria alone.” This means these individuals could qualify for “better rates.”

Conversely, it can “flag more extreme outliers within each class,” identifying applicants who may be considered preferred risks under traditional methods but “showed hidden risk factors,” suggesting they might align with higher risk categories.

Implications for Personalized Pricing and Customer Engagement

Will Cooper, Founder and CEO of Klarity, states the model “not only enhances underwriting accuracy but also strengthens customer engagement and loyalty.” He emphasizes how it “reveals how many applicants are under- or over-classified by traditional methods. This opens the door to more accurate, inclusive and dynamic underwriting.”

Mary Bahna-Nolan, Senior Director, Insurance Consulting & Technology, WTW, highlights the “unique opportunity to harness the power of data to deliver more personalised outcomes that reflect real-world health habits.” She concludes, “Eventually, this will open the door to more personalised pricing and rethinking customer experience and engagement.”

Growing Adoption of Wearable Technology

The increasing prevalence of wearable technology is a key enabler: “With 62 million U.S. consumers using a fitness tracker in 2024, projected to increase to over 92 million by 2029,” these devices are “mainstream.”

Analysing this data “provides real-time insights that can help predict an individual’s lifestyle and health risks, improving the precision of risk assessments and pricing of life insurance policies.”

Conclusion

iPMI Global Analyst, Christopher Knight concludes, “The collaboration between WTW and Klarity represents a significant step forward in the evolution of life insurance underwriting. By integrating real-time, individual-level health data from wearable technology, insurers can move beyond the limitations of traditional, static metrics to achieve more accurate risk segmentation and personalized pricing. This innovation promises not only improved profitability for insurers but also a more transparent, engaging, and equitable experience for policyholders. The increasing adoption of wearable technology positions this approach for widespread impact in the coming years.”