How IoT changes the insurance game


Harkrishan Singh | Director | Application Development | In2IT Technologies | mail me |

The Internet of Things (IoT) has been a hot topic for a number of years, but the pervasive and affordable connectivity required for successful deployment has held back its progress. This is rapidly changing, with the rollout of fibre to the home, 5G and even Elon Musk’s recently launched Starlink satellite.

Emerging players in the insurance industry are embracing IoT, which is beginning to change how the larger, more entrenched providers operate.

From potentially infinite new sources of data to immutable data enabled by blockchain, and even the gamification of insurance through wearables, IoT is changing the game for insurers.

Smart connections

While IoT is not new, lack of connectivity has always been a challenge. However, as fibre becomes more prevalent and 5G rollouts have gained momentum, many potential applications have arisen.

When data can be collected, centralised and analysed via machine learning, there is no end to the insight that can be gained.

Logistics providers can track their shipments and cargoes and can have an accurate idea of the delivery time – this makes insurance and underwriting much more accurate in this space.

Businesses can easily track and calculate risks with the help of smart IoT devices and can help to reduce the risks, which again can have implications for insurance premiums and calculations.

Wearables for the win

One aspect of IoT that is already being utilised by insurers, specifically in the health insurance space, is wearable technology.

The wearables market grew from 24 Billion USD in 2019 to 81 Billion in 2020, driven by the COVID-19 pandemic and the realisation that a healthy lifestyle is essential.

Insurance companies can tap into this market, aligning IoT with their business needs. They can also use wearables to reward people for maintaining a healthy lifestyle, which in turn will benefit them through reduced claims.

Technology underpins it all

IoT devices  can help insurers in many areas. For example, they can track real-time data related to cargo, vehicles, vitals and personal health.

Anomalies can be flagged immediately for action, to prevent theft, address risky behaviour or alert people to potential health problems. Commercial and Residential Real estate insurance companies can leverage Smart Home devices, HVAC monitoring, IoT enabled sensors and thermostats to manage fire and safety or property damages.

There are various technologies available for different insurance industries. In the medical space, fitness trackers, ECG monitors, pulse oxygen monitors and blood pressure monitors can be used to collect data and alert to potential health problems.

In the automobile industry, telematics devices or On-Board Diagnostic (OBD-II) dongles can be used to monitor vehicle health and also driving behaviour. Trackers can be used in cargo and logistics to reduce theft.

Technology underpins many applications for the broader insurance sector, and collected data can be used to more accurately calculate risk and investigate claims. This not only helps insurers to more effectively determine appropriate premiums, it improves safety and helps in reducing the amount of fraud.

Differentiation is the key

One of the key takeaways is that IoT devices provide data that can be analysed for improved insight. This means that premiums can be tailored more precisely to individual clients, rather than using a blanket approach to risk.

IoT is disrupting the traditional insurance business model, and the pandemic has brought the benefits of this to the fore. Insurers need to embrace these technologies and use them as points of differentiation, helping them to attract and retain customers in a highly competitive market.



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