Fortunately such a tracking mechanism ought to be trivial to automate. People went to some pretty fun lengths just for Pokemon Go, when there's financial incentive and prizes involved...
The insurance company never claimed it was open, I don't see how that's relevant.
If they can prove you were cheating the fitness tracker they can deny the insurance claim when you die. Not great for any family members who were counting on that.
The same countries, like the UK, where most motor insurers are well on the way to requiring in-car black boxes? Even the AA and RAC, that once could have been relied on to take a stance against such a thing, now offer telematics insurance.
It's the standard trick: the company will offer temporarily lower prices, then once enough people are onboard, increase them again.
The company sets a new normal, gets all your fitness data, the people get a temporary price reduction, and lose their privacy.