Ways On How Digital Transformation Is Created In The Insurance Industry Thru IoT
There is no question that from smart home devices and connected vehicles to wearable health monitoring devices, the Internet of Things has had a transformative impact across market sectors, and insurance is no different. Globally, about 127 new devices are connected to the internet every second. Insurers are now in a better position to leverage the opportunities that come with this new tide of global digital expansion.
IoT allows insurers to better engage with customers, better predict and evaluate risk, make the claims process more efficient, and create better insurance products. The data and decision-making insights gathered from IoT devices have been revolutionary for insurers, and the potential of this technology is just starting to be realized.
Below we take a closer look at five areas where IoT technology is driving transformation for insurance.
The ability of IoT devices to transmit large data volumes in real-time opens up avenues for seamless data analysis and responses. Telematics relies heavily on the diagnostic data gathering capabilities of IoT devices. Most insurance companies can benefit significantly from this technology. Sales and marketing, policy pricing and servicing, claims management, and risk assessment is all potentially enriched by the data collected from a telematics device. For example, black boxes in cars monitor driving habits and patterns of owners, thus allowing insurance companies to properly price for risk, based on the data gathered. In short, telematics is a large leap forward in how insurance companies operate and conduct business.
2. Smart housing
Smart housing did not originally garner much attention within the insurance market. However, as IoT technology evolved and providers like Amazon and Google put forth new offerings for smart homes, insurers took notice. Owing to the availability of IoT data, insurers were then able to provide a range of services based on data collected from smart devices installed in IoT-enabled homes, including those which monitor aspects of security, energy, heating, water usage/flow, and more. Insurers could then offer discounts for owners who use certain monitoring devices or even offer integrated product/service bundles for smart home technology, control, services, and claims handling.
3. Smart healthcare
IoT-based health insurance uses technology such as wearable monitors, biosensors, and networked health devices and applications. Products track and identify the specific types of care that each patient requires. This allows health insurers to assess risk and create better billing models that consider all the data the devices provide in real-time. Whether it is monitoring, care optimization, or even payment, IoT health insurers now have the opportunity to understand the pulse of policyholders and personalize products to suit specific needs. The technology can even encourage insurers to offer new products or add-ons for specific groups, such as telemedicine, that will dramatically enhance the quality of life and the insurer-customer relationship.
4. Commercial lines insurance
The IoT ecosystem boom has shown promising application areas in commercial lines insurance across the globe. It opens up long-term investment opportunities for innovative services that can appeal to current customers and woo future ones. For instance, the deployment of IoT devices, such as drones for loss inspection and implementation of wearable workplace tech that monitors workers’ vital signs and alertness can provide better data to protect commercial property and workers. With the right technology and connectivity partners, standardized IoT devices can be deployed with ease to meet specific requirements across areas like predictive maintenance, injury prevention, and asset optimization for buildings, workers, and equipment.
5. Parametrics — environmental insurance
Natural events, such as weather changes, earthquakes, floods, and other environmental disasters, can be logged by IoT devices and applied to geo-specific industries to allow better insurance coverage and claims management. Commercial operations from the mountain and coastal resorts to farms are heavily dependent on weather conditions that naturally affect business. Any sort of claim payment for damage caused by severe weather events can be calculated based on weather data gathered by parametric IoT monitors. IoT smart sensors can collect and deliver data analytics like geographic locations, construction types, occupancy rate and wait periods, etc, which trigger insurance coverage when certain parameters are crossed. For example, earthquake coverage usually only occurs when the magnitude of the earthquake exceeds a set distance from the epicenter and is applicable for the period when the business is closed, regardless of the damage caused. Another example is FloodFlash, a commercial flood insurance company that provides affordable and tailored flood insurance and provides automated IoT smart sensors for the assessment of climate conditions. This allows insurers to be more responsive by drastically reducing uncertainty in risk predictors.
By monetizing data and insights gathered through networked IoT devices, insurers can have contextual interactions with customers. The data gathered from these devices can allow insurers to develop new business models and services, as well as utilize demand-based pricing through monitoring capabilities. It opens new avenues for generating revenue and value. Additionally, the insights gathered can increase efficiency for prevention mechanisms, improve overall safety standards, response times and help insurers recognize analytic patterns to identify and curb fraud. The insurance industry has always been driven by direct customer contact, and IoT technology has the potential to significantly enhance those contacts and improve customer relationships.
Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.