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Top 3 insurance risks of wearable technology

At a glance

  • The launch of the Apple Watch is predicted to be the next big shift for wearable technology.
  • As interest in wearable technology increases, the potential for personal and professional data being leaked is greater than ever
  • The possibility of wearable technology being underinsured also makes it important to ensure that your insurance cover is suitable to protect these items

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By reading this article, and correctly answering the three questions underneath, you will have achieved the following learning outcome: Identify the insurance implications of different emerging risks.

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Last year, 81% of large organisations and 60% of smaller organisations suffered an online security breach. With statistics like this, the growing concerns over privacy and data security that result from technology are more pertinent than ever.

Whether it’s gaming networks being hacked, or worries that new smart-TVs could be listening to and recording everything we say, the potential for personal and professional data being leaked is increasing.

These potential risks are amplified when it comes to the latest gadget trend – wearable technology. The market for wearable technology has exploded in recent years, with research firm Gartner estimating that more than 68 million products will ship this year alone.

The proposed launch of Apple’s Smart Watch Collection on 24th April has sparked great interest in the wearable technology industry. With prices ranging from £299-£13,500 and with thousands of apps already developed ahead of the launch, the Apple Watch is set to revolutionise this market.

With this growth in mind, we look at the biggest insurance risks to be aware of when it comes to wearable technology.

Risk 1. Underinsurance

Research from market intelligence agency Kantar Media estimates that 13.1 million people will be using fitness trackers by the end of the year, doubling the 10% figure that currently use them. Additionally, Mintel has revealed that 31% of UK adults are interested in using a smartwatch with fitness functionality, as an efficient way to monitor their health and lifestyle.

Although they may have health benefits, these devices also have associated insurance risks, and it is important to be aware of the impact they will have on home and business contents sums insured.

Wearable technology coming soon:

• Apple Watch – allows wearers to communicate as you would with a smart phone and monitor fitness

Smart gloves – able to aid in the manufacturing process by giving production advice

Smart jewellery – provides wearers with messages, reminders and alerts

With the cost of wearable technology reaching up to £100,000 for luxurious smart bracelets, customers who do not account for this in their insurance arrangements risk finding themselves underinsured – or even uninsured – should the worst happen.

Action: To prevent this underinsurance risk, ensure that the correct level of cover is applied.

For example, Zurich’s Home Solutions 2 product has specifically increased its limit for contents, to adapt to customers’ developing needs, and to provide higher limits.

Furthermore, while customers may have personal possessions cover away from the home, additional protection for wearable technology may be required where values are higher than the standard limits.

Risk 2. Data security

According to a 2014 report from Samsung, corporate mobile security is not as secure as it should be, raising concerns about the number of companies that may be ignoring the risks of wearable technology.

Around 75% of businesses use mobile devices that are connected to their corporate network, yet poor security protocols make breaches commonplace, with more than 10% of businesses incurring costs of more than £25,000 due to security incidents in the last year. If wearable technologies are connected to business devices, the number of incidents could increase dramatically.

Wearable technology

“There is a clear challenge for businesses to keep pace with evolving technology,” says Graham Long, Vice President Enterprise Business Team, Samsung UK and Ireland. “The challenge for businesses and IT decision makers is to embrace new ways of working, but ensure all devices are highly secure and efficient.”

Action: Businesses need to adopt a highly proactive approach to data security. As the use of wearable technology increases, customers are encouraged to provide employees with clear policies, and user-friendly guidance on how to filter and prevent information leaving the organisation.

Risk 3. Loss of personal information

Many experts believe that 2015 will mark the next big shift in personal technology, with the launch of the Apple Watch hailed as a tipping point. Wearable technology is fast becoming a must-have household item, able to monitor fitness, sync with apps on other devices and provide many other functions.

But where items of wearable technology, such as smartwatches or smart-headphones, are connected to our mobile devices, their loss could have devastating repercussions.

Add to this the loss of fitness trackers or other wearable pieces of technology, which are now recording a whole new world of personal data, and personal privacy, could become a thing of the past.

The challenge for businesses and IT decision makers is to embrace new ways of working, but ensure all devices are highly secure and efficient.”

Graham Long, Vice President Enterprise Business Team, Samsung UK and Ireland

Action: Customers should remain aware of how unsecure their personal information could be, and how manufacturers, third party partners and competitors potentially have access to this sensitive data. Customers need to have an understanding of the repercussions of unwanted access to this data and the impact from both a commercial and personal perspective.

It is important to ensure that any personal possessions insurance cover adequately protects any items of wearable technology.

For more information on this and other emerging risks, please speak to your local Zurich contact.

Image © Getty

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