The U.S insurance industry is one of world’s largest insurance markets and despite its size and overall financial health, it is experiencing profound change driven by Internet of Things.
Internet of Things brings with it huge potential in the form of real time data collection and the power of sharing has created a significant difference in the processing and opened up new opportunities for product segmentation. At the same time, it has made predictive modelling better at assessing risk, improving loss control and premium growth assessment.
By now we have seen the various impacts that IoT can have on the insurance sector. Let’s see how they can use these to become more profitable-
With sensors installed at homes, office buildings, warehouses and factories, it is easier to detect smoke, temperature, earthquake motion or any other hazardous condition. With a two- way communication, the IoT devices will provide alerts prior to any emergency situation in the near future.
Health tracking has become much easier in the past few years with wearable technology that includes GPS data, monitoring heart rate, recording sleep activity, calorie burned and documents all your daily activities. Many employers are establishing programs that reward employees have a healthy lifestyle as recorded by their wearable device. An employer could detect substance abuse by workers on the job and initiate proactive intervention.
Today, highly intelligent sensors have been embedded into a variety of products such as appliances, toys, electronics, machines and much more. As these sensors are embedded and enabled, insurance carriers offering warranty and protection against these products can offer preventative service prior to product breakdown. There is likely to be an up-sell for additional insurance products due to this.
Carrier Process Transformation:
While we hear more about gathering and exchanging data with the policy owner through IoT connected devices. The most significant change will occur within the carrier as they will be collecting enormous amounts of data and as per IDC, IoT will produce 50 trillion gigabytes of data produced in 2020. This will give rise to a new challenge of converting data into usable insight.
It will require a much larger and more sophisticated IT department, data warehousing, analytics teams to make sense out of the data that is gathered. One of the many examples will be detection of any kind of change in risk warranting a premium.
Following closely, the insurance companies will have to scale up their capacity. In the end, insurance companies can harness the power of IoT by thinking creatively about how to use the gathered data. The data involved presents many opportunities for the insurance industry.