Connecting The Insurance Industry And Driving It Towards Digitalization
The ability to accurately discern the past and predict the future based on nothing but data points and the experience of actuaries and adjusters has served the industry well up to now. Insurance is, after all, a truly global industry. While this remains the case, the landscape is now radically different from the past, thanks in part to the advent of the Internet of Things (IoT). The use of these technologies that collect, record and transmit live data has proliferated exponentially over the past decade, and for a data-reliant industry like insurance, the impact has already been profound.
They may already seem ubiquitous but estimates of how many IoT devices will connect our cars, homes, communities, medical services and work lives by the year 2020 range from 30 billion to 50 billion. Whatever the precise number, this will generate (and already is) a huge amount of data to be analyzed and monetized.
This increase in the quality and quantity of available data is already producing some significant outcomes; the process of writing policies can now be far better informed by what is known about the risk level of an individual or entity, as opposed to simply what is known about the claims generated by an entire class of risk. Using the high-quality, objective data derived from IoT, it is now possible to assess claims more accurately and efficiently, and in some cases, even prevent them from arising entirely.
In turn, this is changing how insurers interact with customers, both before and after a claim, with one executive predicting that we are in fact “shifting from a claims-handling business to a claims prevention one”. As the value proposition of exchanging data for value becomes more concrete, it could become a strong pull-factor driving uptake of connected insurance products. And yet, already operating in an environment of squeezed profits, high regulation and low consumer trust, the industry is witnessing something of a perfect storm at present. There is no question as to whether the global insurance industry is going to go digital, and most of the industry understands why it will. The real problem for most is how it should happen and creating an environment in which they can maximize the value of insurance technology.