This week, I saw the first instance of IoT being used in insurance outside of the auto industry. Nationwide Insurance and Kinetic, a seven-year-old maker of a wearable device that tracks worker movements, have launched a policy for workers’ compensation.
Companies will buy the policy from Kinetic and deploy its wearable among their workforces. The goal is to reduce the number of repetitive strain and other injuries associated with labor-heavy jobs such as those found in health care, construction, etc. Not only does Kinetic’s device track movement patterns, it vibrates when someone wearing it moves in a potentially harmful way, alerting them to make a change.
Kinetic has reduced repetitive-stress and other injuries among its customers’ employees by 50% to 60%, according to an actuarial study. Such results, coupled with the need to expand its customer base beyond self-insured clients, led the company to team up with investor Nationwide to build an IoT-enabled workers’ compensation policy.
This is exciting for a lot of reasons. For years, I’ve waited for the insurance world to take advantage of real-time data to anticipate and prevent problems before they turn into claims. Given the high cost of many consumer smart home devices and the marginal utility of, for example, an expensive leak detection system, it seemed unreasonable that an insurer would pay for and install such real-time trackers as part of issuing a policy.
Instead, consumers mostly get discounts on their premiums if they pay for and install such gear, much like consumers get discounts on their home insurance when they install a security system. Only in automotive have we seen some innovation, with companies such as State Farm and Progressive using personalized driving data to establish premiums. A few have even offered mile-by-mile insurance based on real-time driving.
Kinetic and Nationwide are flipping the model a bit. Implementation of the Kinetic device isn’t supposed to be punitive for workers; rather, it’s designed to draw attention to bad habits so that workers can correct them before they cause injury. The policy will remain active as long as 85% of a company’s workforce uses the device.
Haytham Elhawary, the CEO of Kinetic, said he was inspired to create the device because his mom was a nurse, so he was well aware of the toll that a work injury can take on a family. “These workers get injured a lot,” said Elhawary. “It’s almost like you’re asking them to work like they’re an athlete, but you give them very little training.” He built Kinetic to provide that training while workers are on the job.
When workers first start using the device, which is worn on their belts or waistband, they get vibrations for about a tenth of their poor movements so as to help train them slowly, building the necessary muscles and muscle memory to perform each movement correctly. Their progress also generates points or other gamified elements to keep them engaged and motivated to continually improve.
The devices were trained on some 200 people of varying sizes, each of whom work different types of jobs, to ensure that they track data accurately across a variety of body shapes and movement ranges. Those 200 people wore full-body sensor suits to help develop the algorithms that correlate to the correct movements measured at the waist, according to Elhawary.
On first hearing about the device, my biggest fear was that it might be used to push people to work faster and deliver more, which is a pretty common theme with warehouse workers and technology. But Elhawary said that in fact, it can show managers where they are asking too much of employees. And employees can use the data to demonstrate to management patterns in the environment that lead to motions that can cause injury.
Since launching the wearable in 2017, Kinetic had leased it out, but with the insurance plan Elhawary saw an opportunity to expand the business to new customers. Early customers were all self-insured, and tended to purchase the device because they were concerned about worker safety or saw reductions in their insurance costs. But companies that had outside insurers didn’t see a reason to buy the wearable because they didn’t see high costs associated with worker injuries.
“We thought if we want to get this device out there we have to provide the insurance,” said Elhawary. But then, he said, “We realized we were selling [our customers] the wrong product. We needed to give them the devices for free and sell the insurance.”
With this plan, Kinetic gains access to a larger market, and insurance firms get a new example of how IoT will radically change their business.