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How the IoT is Disrupting the Insurance Industry

Posted on January 28, 2016 by Guy Weismantel

 Digital Insurer Blog

The Internet of Things (IoT). We've all heard the term used, but what does it mean, and more importantly, what does it mean for insurance? 

Most importantly, the IoT makes an enormous amount of data available for insurance agencies and carriers. The rapid growth of the IoT presents a great opportunity for insurance agencies and carriers to:

• Gather data on policy holders about their lifestyle habits, driving behaviors and their health
• Mitigate risk by providing safeguards to locate stolen cars and prevent vehicle theft 
• Sending alerts to first responders in case of dangerous events in the home or vehicle
• Reduce the impact of human error in gathering forensic accident data, or help insured drivers to avoid poor driving conditions

Explosive Growth of Smart Things

Machine to Machine (M2M) communication isn't new, though it is growing smarter by the minute. In 2006, according to an Intel IoT study, there were about 2 billion connected devices. The same study estimates there were about 15 billion smart devices, and they expect that quantity to leap to 200 billion by 2020.

Transforming the Insurance Industry

Accenture conducted their own studies recently, to discuss their views on the impact of digital on the insurance industry as a whole. Almost half the executives they talked to said the IoT would be an important revenue generation driver for their company.

The amount of smart devices in the marketplace has tripled over the past year, their study finds. The growth of programs involving IoT devices has grown by three hundred percent as well. About forty percent of executives surveyed said they are piloting, or about to launch initiatives involving:

• Auto telematics
• Connected homes and/or buildings
• Health and fitness monitors
• Other wearable devices

Smart Cars and Trucks

Automotive manufacturer Volvo has stated it will take on full responsibility for accidents involving its autonomous cars. Other telematics devices are driving down the number of collisions that take place to begin with. 

Increase profitability with fewer claims, and manage claims more effectively with better data. Producers can have more face time with customers, instead of spending a lot of time inputting data into antiquated systems. 

Wearables and Health Monitors

Wearables can provide health care providers with insights into the well-being of their patients. They also can encourage the people who wear them to: 

• Exercise regularly
• Check their vitals in times of stress or discomfort
• Send their doctor blood sugar levels and other data 

When your clients are more aware of the state of their health, and have a real-time link to their health practitioner should an injury or illness occur, your interests as their insurer are exposed to less risk. Further, you can offer them insurance products which reflect their wellness. 

Smart Homes and Buildings

Accenture's surveys showed that many agencies and distributors changed their views on the importance of the IoT. Connected homes and buildings is the area which had the biggest increase in new M2M programs and pilots. 

Home owners can Install connected security systems, and control lighting, environmental controls and camera systems remotely. In commercial buildings, high value data centers, offices and manufacturing plants can be equipped with connected devices for safety, security and fire prevention. 

Has your insurance agency initiated a program to leverage data from the Internet of Things? Do you need help implementing applications to better serve your connected insurance policy holders? 

Join in on our ongoing conversations about the future of insurance in on our LinkedIn, Twitter, and Facebook pages.

Mr. Weismantel is the Vice President of Marketing at Vertafore. With 20 years of marketing and financial leadership in companies such as Microsoft, Business Objects, Baxter HealthCare, Caremark International, and Expedia, Guy’s career has focused on bringing differentiated products to market and providing the “compelling reason to purchase” for customers and prospects alike.

Guy has a Bachelors Degree in Accounting from the University of Notre Dame, and a Masters Degree in Business Administration from the Kellogg School of Management at Northwestern University.


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