Insurance, Innovation and IoT – FC Business Intelligence Report
Article Synopsis :
The emerging ecosystem of connected devices presents a huge opportunity for insurers looking to become more relevant to digital-native customers.
The report “Insurance, Innovation and I-o-T”, by FC Business Intelligence, explains how the web of connected devices will transform the relatively static insurance industry and looks at ways insurers can integrate I-o-T into their business and operating models. The report shares research and key findings from various sources on the growing impact of I-o-T on insurance:
- 20% of insurance companies are currently piloting, testing or deploying an I-o-T project. The number rises to 50% over a three-year period.
- Property insurance companies are increasingly using drones to assess damages after an incident has occurred. Drones hold the potential to make insurance adjusters’ workflow 40% to 50% more efficient.
- By 2020, over 50 million US drivers will have tried usage-based insurance models that rely on I-o-T devices.
- Roughly 30% of the auto market is expected to involve telematics for the majority of policy interaction and pricing by 2025.
- Also by 2025, half of U.S. homes are expected to be connected through I-o-T devices for monitoring and system control.
- 80% of respondents to an Intel survey would be willing to share their health data anonymously to reduce health care costs.
The common inclination with new data sources and I-o-T is to use them as tools to lower premiums and provide discounts, which, of course, means less revenue for insurers. The report discusses five areas where the cost-risk-opportunity matrix is particularly dicey for insurers:
- Handling the Data Flood
- New Product Options
- Maintaining Brand Value
- Meeting the Skills Gap
- Security and Cyber Risks
The report articulates the top-five expected benefits of I-o-T adoption realized by insurers moving sooner rather than later:
- Potential to reduce severity and frequency of claims
- Better risk assessment
- Service and satisfaction improvements
- Growth in cybersecurity markets
- The omni-channel insurer
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Digital Insurer's CommentsWe believe I-o-T will blur the line between product and service giving rise to the concept of Product-as-a-Service. Today a consumer buys an automobile and auto insurance separately, tomorrow they’ll purchase the two products bundled seamlessly as one.
Insurers at least trying to re-imagine an entirely new I-o-T-enabled world are on the right track. New business models enabled by mobility, cloud and analytics, harnessing real-time data streams flowing from billions of connected devices, are the future path to profitability in insurance.
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