Internet of Things (IoT) or Independent Risk Management

Internet of Things (IoT) or Independent Risk Management
Article contributed by Matthew Collins
Written on 15 February 2016

The Internet of Things (IoT) can be identified as a network of material objects—vehicles, buildings, devices and other items which are able to exchange data using their network connectivity, software, sensors and other electronic equipment. The Internet of Things allows objects to be sensed and controlled remotely across existing network infrastructure, creating opportunities for more direct integration of the physical world into computer-based systems, and resulting in improved efficiency, accuracy and economic benefit. 

General Overview

This technological progress will have a massive impact for the insurance industry over the next decade. Insurers across the Globe look for new opportunities to modernize their policies and claims practices. Your health, home and auto coverage plans will become more connected to your smart devices — and more personalized to your behavior. 

“The connected coverage” is the synopsis of the new insurance strategy when the insurer will persuade you to take risk management into your own hands by actively using IoT in your daily life. From the other hand, using of IoT will allow insurers to analyze and identify customers’ needs and risks more efficiently. Moreover, policyholder service will transform from customer-initiated activity to insurer-initiated. IoT as an insurance prevention policy modelIt’s a very common practice to

IoT as an insurance prevention policy model

It’s a very common practice to analyse the history to make more thoughtful decisions about the future. The IoT will be able to provide an incredible possibility for your insurer to analyze new information and cross-reference it with historical data to make predictions and suggest preventative measures. Over time, this could mean that insurance as we know it — a model built around reactive claims — could shift to a model that’s built around prevention.

You’re already tailoring your smart devices to serve your unique needs, and new IoT technologies are proving they have what it takes to mitigate risk and reduce claims losses. The new model will adopt strategies that observe your behavior and the specific measures you take to mitigate risk, which will allow for complete personalization to match your individual demands. This is a smaller, more nascent market that may be the catalyst for convergence across connected homes and cars. For that reason alone, it should remain a focus area of P&C insurers. 

For example, future wearable devices could report on the physical or emotional environment of the wearer, potentially leading to independent living solutions for the elderly or physically challenged. New business models could emerge, perhaps with employers buying wearables for their insured employees or companies monetizing the health data by providing relevant referrals. Actively monitoring and identifying targeted opportunities is a prudent step for P&C insurers.

New approach 

New approaches, such as gamification (for example, Fitbit) are engaging younger consumers to change behaviors and, subsequently, their risk profiles. Insurers can similarly work with consumers to change their driving and maintenance behaviors through UBI and then extend that influence to OEMs. In the home, insurers can shape a similar dialogue, integrating a wealth of data to educate homeowners on timely maintenance, access to quality material, and  recommended contractors. Advances in safety technologies will impact accident frequency, reducing losses and, thus, premiums. In the longer term, the continued rise of autonomous vehicles and car sharing will change the nature of insured assets. These trends will lead to a meaningful shift in premium mix, increasing the strategic importance of the home in the future. 

Players with an advisory- focused value proposition may be well positioned to capitalize on this shift. 

IoT will include 26 billion internet-connected devices by 2020. It also predicted that by 2020, IoT product and service suppliers will generate incremental revenue of more than $300 billion.



Walker Andersen - It's all about time