How Will IoT Impact the Insurance Industry?

The Internet of Things will disrupt and impact many industries, from automotive to healthcare to energy and beyond. One industry that is already being redefined by IoT, but we don’t usually think of as such, is the insurance industry.

How will insurance providers change their offerings when we all own self-driving cars? How will the massive amounts of data from a manufacturing floor influence workers comp and industrial risk? If everyone one day uses wearable, health monitoring devices, how will insurers determine rates and provide health insurance to their customers? What about home insurance for a connected home?

At the Insurance IoT USA Summit event in Chicago, panelists and keynotes set out to answer these questions and more. Read on for the main takeaways and insights from the event.

Opportunity & Challenges with Connected Insurance

1. Business Model Design--Delivering a valuable product to customers in a profitable way
2. Demonstrating ROI
3. Consumer Adoption and Trust of IoT

1. Security and privacy
2. Interoperability and compatibility
3. Analytics

There are a number of companies who are already tackling these issues, many of which shared their experiences in building products that combine insurance with IoT technology and data.

Creative Solutions for Autonomous Driving, Smart Homes, and More

IoT provides the insurance industry with more data than ever before, enabling companies to more effectively determine rates and provide services that keep people and their assets safe.

Connected Car Data for Insurance

Connected car and mobile technology can enable the next generation of insurance products. The challenge is penetration and adoption of connected cars. To solve this, they’re using the most ubiquitous IoT device out there, the phone, to supplement the connected car while we wait for mass adoption. Mobile phones can use accelerometers, gyroscopes, GPS, and more sensors to provide data on consumer driving habits.

Smart Home Insurance

He noted that smart home systems and devices offer insurance companies the opportunity to reinvent their business models and to move from simply insuring against risk to helping customers protect the properties. The Internet of Things provides opportunities for insurance companies to offer product-service bundles. These bundles (i.e. home insurance + home monitoring technology) would reduce the probability of damage and lower the overall risk for homeowners and their insurers.

IoT Increases Health and Prevention

Connected wearable devices are being utilized in some really interesting ways. The John Hancock Vitality Program is a great example. Someone with diabetes may pay more for life insurance. But as part of the Vitality Program, they can use an Apple Watch to track activity and if they meet certain goals, they will get a discount on the following year’s premium.

Wearables and other health technologies are giving insurance providers vast amounts of data that can be used to price rates more fairly and profitably, and help customers prevent injury and disease.

To wrap up, the event was a deep and insightful dive into the evolving relationship between the insurance industry and the Internet of Things. We learned about the immense opportunity that exists in combining the two, and some challenges that providers need to think about when developing products and services.

Most interestingly, we got to hear first-hand from the companies that are already building products and coming up with innovative solutions to utilize IoT in insuring people and their homes, cars, and belongings.