The New Frontier: Why Stay Abreast of BBI Trends
Your policyholders want more control over what they pay. That’s the quiet pressure reshaping health insurance right now — and behavior-based insurance (BBI), also called pay-as-you-live (PAYL) insurance, is the answer the market is building toward.
BBI uses real-time health data — collected through wearables, mobile apps, and connected devices — to adjust premiums based on how people actually live. Healthy habits get rewarded. Risks get priced more accurately. Everyone wins.
- For insurers, BBI means tighter loss ratios and more loyal, health-conscious customers.
- For healthcare providers, it opens new channels for preventive care and deeper provider–insurer collaboration.
- For policyholders, it means fairer pricing they can actually influence through their own behavior.
- As of 2025, the US market for health BBI is growing steadily — the early movers will capture the most.
The need for custom-built pay-as-you-live insurance software — since no off-the-shelf solution fully covers it yet — alongside compliance and data privacy challenges, will slow some players down. But not those who start preparing now. INNERLUXES treats BBI as one pillar of broader insurance digital transformation, and we work hand-in-hand with health insurance companies ready to move first.
Demand for PAYL Products
People are already looking for this. Rising premiums and confusing traditional buying experiences are pushing insureds toward products that feel personal — and priced fairly.
prefer innovative life insurance options, with PAYL among the most popular. (Capgemini)
in life BBI — trailing motor UBI (76%) by a smaller margin than most expect. The appetite is there. (Accenture)
personal health data when they see a clear, fair benefit in return. Transparency is the unlock.
PAYL vs. Motor UBI
The clearest picture of where health BBI is headed? Look at where motor UBI already is. BBI didn’t start in health — it started in motor insurance, where it’s now mainstream. The trajectory there tells us a lot about what’s coming.
90% of market leaders offer UBI
Nearly all US motor insurance market leaders now offer some form of UBI products — demonstrating that mainstream adoption is achievable and commercially proven.
60% of auto policies are UBI
UBI accounts for 60% of total auto policies written across the US — it hasn’t replaced traditional coverage, it sits alongside it as a standalone or bundled option.
26% of customers hold UBI
Around 26% of all US motor insurance customers currently hold a UBI policy — a market penetration rate health BBI is now positioned to replicate.
AI & IoT accelerated growth
The growth of motor UBI was accelerated by maturing AI-powered data analytics, IoT and telematics, and blockchain adoption — the same stack now enabling health BBI.
Transparent pricing built trust
Consumer trust built gradually through transparent pricing models and visible rewards — the lesson health BBI must internalize from the start.
Health BBI follows the same arc
The pattern is clear. Health BBI will follow a similar trajectory to motor UBI — and 132 IT professionals across our teams are already helping insurance clients build the infrastructure to ride that wave early.
Selected Insurance Projects by InnerLuxes
Technology Maturation for BBI
Technology readiness is the real gating factor for BBI adoption — and it’s more nuanced than a simple “ready or not.” Our assumption going in was that PAYL-enabling technology sits at low-to-medium maturity. Industry research backed that up.
Gartner’s Hype Cycle for Digital Life and P&C Insurance places the kind of deep personalization BBI requires at mainstream adoption roughly a track record out. But here’s what that framing misses: not all the pieces move at the same speed.
AI analytics — within 2 years
AI-powered analytics are on track for wide insurance adoption within the next two years. This isn’t a future bet — it’s a near-term investment your technology roadmap should already include.
IoT & telematics — within 5 years
IoT and insurance telematics solutions are expected within two to five years. Getting ahead of this curve means you arrive at full capability with an operational head start.
Build now, scale as it matures
The strategy for early movers isn’t to wait for full maturity — it’s to build the foundation now and layer in capabilities as the ecosystem develops. Across 30+ industries, our teams have built exactly this kind of phased, future-ready architecture.
What Industry Players Say
There’s no single consensus in the room — and that’s actually useful information. Our survey of insurance business and IT leaders revealed a clear split.
The optimists (50%)
- PAYL will be commonplace in life and health by 2030
- Consumer demand for behavior-reflective products is undeniable
- Early infrastructure investment will pay off significantly
- Proven motor UBI results validate the model for health
The cautious (50%)
- Data privacy complexity is a genuine regulatory challenge
- Modernizing legacy insurance systems requires multi-year effort
- Incentive structures may not move the needle for all customer segments
- Fraud prevention in wearable-based systems is a real design challenge
Both sides have a point. The opportunity is real. So are the challenges. What separates winners from watchers in this space is choosing to build deliberately rather than reactively.
What Influence to Expect
BBI doesn’t just change how insurance is priced. Over time, it changes how healthcare is delivered. Here’s what each stakeholder stands to gain — and what to watch out for.
For a wider view of where health plans are heading, explore our related work on elevating customer experience in health insurance, bringing smart underwriting to health insurance, and cost reduction in health insurance.
Insurance companies
- PAYL lets carriers respond dynamically to risk.
- Healthy behaviors drive down claim volume.
- Attracts lowest-risk, most engaged customers.
- Loss ratio math changes meaningfully.
- Requires IT modernization & fraud prevention by design.
Insurance customers
- Meaningful savings on annual premiums for active engagers.
- Genuine improvement in health outcomes via behavioral feedback.
- Transparent scoring and realistic reward thresholds are essential.
- Non-intrusive experience is the difference between champion and abandon.
Technology vendors
- Demand for specialized PAYL tools is accelerating.
- First movers want established solutions, not prototypes.
- The active planning surge lands roughly 2025–2028.
- Strategic partnerships with insurance software firms fast-track market access.
Healthcare providers
- Real-time policyholder health data becomes a shared resource.
- Deeper collaboration on preventive care and early intervention.
- Outcomes-based models benefit the entire care chain.
- BBI reshapes not just insurance pricing but how healthcare is delivered.
Behavior-Based Insurance – Q&A
BBI, also known as pay-as-you-live (PAYL) insurance, uses real-time health data collected through wearables, mobile apps, and connected devices to adjust premiums based on how people actually live. Healthy habits get rewarded with lower premiums; risks get priced more accurately.
INNERLUXES predicts that by 2035, at least 60% of health payers will offer some form of behavior-based insurance alongside traditional coverage. BBI penetration in life and health is still early in 2025 — but the first-mover window is open right now.
It’s less of a barrier than expected. Research consistently shows that 50–70% of US insurance customers are willing to share personal health data when they see a clear, fair benefit in return. Transparency and trust are the key unlock.
AI-powered analytics are on track for wide insurance adoption within two years. IoT and insurance telematics solutions are expected within two to five years. The right strategy is to build the foundation now with available technology and layer in capabilities as the ecosystem matures — not to wait for everything to be ready.
Key challenges include IT modernization investment (often a multi-year digital transformation), fraud prevention in wearable-based systems, and pricing carefully to avoid unintended bias against lower-income customers. These aren’t reasons to avoid BBI — they’re reasons to build it properly with the right technical partners from the start.