Willingness to Disclose Sensitive Information for Underwriting Purposes

Abstract: The rise of Big Data is creating tremendous opportunities across all industries. As the development promises disruptive changes of business processes and manifold benefits both on the company and customer side, health and life insurance companies engage and invest in Big Data approaches. By collecting, storing, and analysing huge amounts of customer centric data, they hope to enhance their risk assessment, prevent insurance fraud, to operate more efficiently and ultimately to gain a competitive advantage. Therefore, new insurance policies rely on the adoption of wearable devices which measure fitness achievements and health related values, providing the insurer with valuable information and at the same time giving the customer the opportunity to influence the insurance premium and earn other rewards. Despite some benefits, this approach evokes major privacy concerns and the fear of potential negative consequences amongst current and potential customers. Our study shows that both aspects, perceived benefits and perceived risks, are affecting the willingness to disclose information as individuals engage in a risk-benefit analysis which is additionally influenced by the level of trust in the insurance company and individual customer characteristics. Building on a profound theoretical background, including established theories like the privacy paradox and the privacy calculus, and on a qualitative study, comprising nine semi-structured interviews and a thoroughly conducted analysis, we develop and present a research model which clearly identifies and explains all factors influencing the willingness to disclose sensitive information collected by wearable devices to health or life insurance companies.