The rise and risks of digital fitness

Emily Elltoft
Account Executive
16 April 2021
4 minute read

The on-and-off closure of gyms in 2020 saw digital fitness and wellness solutions skyrocket in popularity. Included among the winners were gymtech, personal trainer apps, fitness gadgets – including wearable technology – and IoT home fitness equipment, all of which help to improve users’ fitness through things like active prompts, access to live classes and guided regimes.

To put this into perspective, digital home exercise company Peloton saw its stock price rise more than 440% in 2020. But while the massive growth of such businesses in 2020 can be directly attributed to the closures of gyms and stay-at-home orders prompted by Covid-19, the proliferation of digital fitness solutions is predicted to continue even after restrictions are lifted. This is because consumers have adapted their fitness habits and it’s clear that the pandemic has accelerated digital fitness in a way that may transform the industry forever.

Who are the key players in the fittech revolution?

  1. Consumers, who have sought at-home fitness and wellness services and more accurate ways of tracking their health and wellness.
  2. Large corporates, many of which provided at-work gym facilities, have sought alternatives for their employees when working from home.
  3. Gyms and personal trainers, who have had to adapt to service their clients remotely.
  4. Retail and apparel businesses, who have seen the benefits of partnership solutions in driving customer engagement and sales.

What risks do digital fitness companies face?

Privacy concerns

The quantity and sensitivity of personal data collected by fitness apps and wearables is growing rapidly. Wearable devices and health and fitness apps collect a trove of personal information, such as a user’s heart rate, location, step count, weight, and even sleeping patterns. Some require users to complete questionnaires about their health, while others collect answers to extremely sensitive questions.

While it may seem relatively simple for a single app to secure their user database, as consumers sign up to multiple digital fitness apps and connect different applications and devices, their personal data is being shared amongst more providers, making it far more complex for digital fitness companies to secure and monitor the data they’re collecting and handling.

Why does this matter?

Data breaches are extremely expensive. The GDPR requires companies to report data breaches and can impose fines of up to £17.5 million or 4% annual turnover (whichever is greater) for infringements. It’s important that companies holding personal data – and especially those holding sensitive personal data – like many in the digital health and fitness industry – understand what the potential cost of a data breach is to their business and actively ensure this is considered as part of their risk management strategy, with appropriate cyber cover.

Case study: MyFitnessPal

Under Armour’s MyFitnessPal data breach (2018) was one of the largest data breaches to date. It exposed the usernames, passwords, and email addresses of more than 150 million users. Under Armour subsequently suffered a 3.8% share price drop and MyFitnessPal users filed a class-action lawsuit against the company, which went into arbitration in 2019.

Alarmingly, the data exposed in the MyFitnessPal breach was not especially sensitive when compared to that held by other companies in the digital fitness space. For example, many wearable technologies and fitness apps are used by joggers and bikers to track their routes, exposing them to the risk of burglary or worse.

Bodily harm

Depending on the purpose of the app or device, there often exists the potential to cause bodily harm to the user.

Prior to the pandemic, many exercised in gyms where personal trainers and fitness experts were in the vicinity to monitor gym-goers and offer advice on proper usage. No matter how detailed a manual, it’s impossible to ensure that an at-home user will read instructions, which makes the risk of bodily injury very real!

Reading aside, the interpretation of instructions and advice is another challenge for digital health and fitness companies. While many fitness apps and wearable technologies provide the user with useful insights on their health via mobile apps, how these insights are interpreted can vary widely. When users allow these insights to influence their daily decisions – from the food they choose to eat to the types of exercise they do – they can have serious consequences on the health of a user.

Business interruption

For digital fitness companies that are dependent on apps, system down time can be a killer, causing anything from short-term effects in terms of lost sales to wider implications such as reputational damage and costly litigation.

The insurance market’s reaction

As a result of the increase in demand for digital fitness, insurers have unfortunately seen a sharp rise in claim notifications from clients in the digital health and fitness space. This has prompted some to completely refuse to insure health and fitness apps and others to significantly increase premiums for existing clients at renewal.

How can Superscript help?

With few insurers offering suitable cover for digital fitness companies, it’s more important than ever to partner with a specialist broker, such as Superscript, to ensure that you’re taking the right precautions to limit your risks and make sure that your cover provides the protection needed for business longevity.

We advise that companies in the fitness and health space consider the following covers:

To discuss your specific needs, calculate the level of cover you require and get your business protected, book a call with our team.

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