Article Synopsis :
This report from Insurance Nexus takes a deep dive into connected insurance. It covers pretty much everything starting with how the internet of things (IoT) can and should do for insurers and their customers.
It looks at how the insurers’ tech stack needs to handle it and how to deal with the challenges before examining use cases, future opportunities and how to build a business based on the IoT.
We don’t have the space here to look at all these areas, so we’ll focus on some of the findings. But do take a look as there is a lot of insights and analysis in this meaty document.
The potential of IoT is huge, but insurers are only just scratching the surface of the practical problems it poses, starting at how best to install sensors in buildings.
But insurance and reinsurance is undergoing transformation – even if that reform is happening at different levels and speeds.
But it is clear that insurers must become fully digitised. Splicing this new tech to existing teams with the help of a few outside agencies is not going to work. The whole organisation, from actuarial calculations of risk and product development at the back end to marketing, customer services and claims settlement at the front must become digital.
A lot of the data generated will be useless, requiring infrastructure that can process it. This will power with the help of AI and machine learning.
More than just insurance
Insurers will have to sell more than just insurance, offering added value services to customers. Some will be preventative, issuing alerts about suspicious activity in or around their house, warning drivers of approaching storms or motivating customers to exercise.
Others will find lost cars and reliable plumbers while scheduling boiler maintenance, while there will be those triggered by an accident, directing emergency services to the site.
The problems of data flow will be resolved as insurers get better at designing services that use that data.
Extra service will become more personalised and satisfy the individual needs of a customer and in time become a more general guardian of assets and interests.
Must work on trust issues
A more responsive, tailored service requires more customer engagement. Trust is patchy, with a 2015 IBM survey showing that only 43% of US customers polled said they trusted their insurer.
For businesses looking to unlock the minutiae of their customers’ private life, this is a problem. But the growth of AI voice assistants such as Alexa, Cortana, Google Assistant and Siri may improve the trust if consumers believe these devices will not gather data that will be used “against” the customer – unless they are attempting fraud, naturally.
Increased trust is likely to deliver greater loyalty and improve the opportunities for upselling.
Competition is increasing
Digital disruption will create winners and losers so business models are absolutely critical.
Insurers expect to be working within an ecosystem that connects all domestic products – devices, white goods, heating and lighting. While no such ecosystem exists today, insurers do fear they may be disintermediated from their customers.
Bringing everything together
The four main lines of the industry – auto, homes, health/life and commercial – will begin to overlap with boundaries becoming more blurred.
Auto is already changing as car makers adopt increasingly comprehensive safety features.
Next will be health and life, because, wearable devices and smartphones provide objective information about the wearer. This line will probably become the most sophisticated line
Commercial property is the next likely line to transform, as facilities managers deal with insurance issues very differently from homeowners.
However, while the home is as yet underdeveloped, around half the companies surveyed were building products to tie in with domestic IoT.
However, there remains a lack of senior management engaged with IoT development, which is likely to hamper its growth.
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Digital Insurer's CommentsA fascinating report on the growth – and in some cases the lack thereof – of the internet of things (IoT).
Most of us interact with some elements of the IoT, but just like the digitalisation project as a whole, there is a vast array of approaches and levels of commitment to the area.
The potential is huge, and those who get it right may be able to reengineer their whole business model on the back of the work they have done to achieve that success.
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