Faculty of Actuarial Science and Insurance with Adrian O'Hagan (University College Dublin)

Talk Title: Incorporating Heart Rate Variability into Health Insurance Pricing: Evidence from Simulation and Wearable-Derived Data

Abstract: Heart rate variability (HRV), measured using wearable devices, is recognised as being associated with mortality risk. However, the implications of incorporating HRV into life-insurance pricing, particularly in the presence of information asymmetry between individuals and insurers, remain unclear. This study examines how HRV-based risk information may affect insurer performance under alternative pricing strategies using a controlled simulation framework. We generate a synthetic population calibrated to age- and sex-specific baseline mortality rates and introduce an HRV-related multiplicative hazard component, with effect sizes varied across a plausible range informed by the clinical literature. Two insurers are considered: one that prices policies using traditional rating factors only, and another that incorporates HRV into premium calculations. Individuals are assumed to purchase insurance based on premium price, while only a proportion of the population is informed about their true HRV-adjusted risk. Both the strength of the HRV–mortality association and the proportion of informed individuals are varied, with each scenario repeated multiple times to account for stochastic variability.

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