Internet of Things and insurance – Roland Berger Report
Article Synopsis :
Roland Berger’s report, “Internet of Things and insurance“, summarises the view of 23 leading European insurers who took part in the ‘IoT Insurance Think Tank’ conducted between November 2014 and February 2015.
Connected-car, connected-home, and connected-health are the three IoT vectors analysed in the report.
Changes which started with connected-cars (UBI telematics) are slowly evolving into connected home and connected health applications. Insurers will likely be forced to assume one of two roles in the emerging IoT landscape:
1. Build a leading IoT ecosystem
- Build an IoT ecosystem capturing data from various IoT devices
- Use data to improve insurance value propositions and monetize them to third party companies
2. Deliver IoT linked insurance and assistance services
- Deliver IoT linked insurance and assistance services by forging partnerships with platform owners (or participating in platform owners data marketplaces)
The report suggests insurers will not likely build dominant IoT ecosystems, as requirements such as real-time data collection, wireless connectivity and analytics are the domain of technology companies like Google and Apple, giving them a significant advantage. Tech players will likely monetize IoT data in one of three ways, all posing a threat to traditional insurers:
- Sell data to insurers
- Distribute insurance
- Become an insurer
Other important findings of the report are:
- 60% of European top insurers have launched connected car solutions, but almost none has entered the smart home or health space
- The case for connected car insurance solutions is currently more obvious than for home and health applications
- Italy and the UK are the most advanced countries in terms of connected car insurance solutions
- Connected car is perceived as the first IoT segment to grow, pushed by car manufacturers (installing devices as standard equipment in new vehicles)
- Insurers are likely to get intermediated access to IoT data – a regulatory change could help prevent this trend
- The “dominant ecosystems” scenario is seen as the most likely – but with a wide variety of opinions
- New regulation, social trends and private initiatives could foster a radical shift in the way citizens control their personal data
- Specific capabilities will be required to succeed in each IoT scenario
Link to Full Article:: click here
Digital Insurer's CommentsIoT represents a paradigm shift in insurance forcing insurance carriers to become technology companies. Some carriers will embrace the transformation, others will opt to cope by partnering with digital natives. In either case, we agree with the report’s recommended actions over the next 2-3 years:
- Build or partner? Define and share a vision and strategic roadmap toward internal alignment.
- Participate in lobbying actions in favor of the preferred scenario
- Progressively build experience and skills in an agile fashion, launching ‘light’ IoT solutions, collecting and analysing data, deriving insights, delivering new services
- Continue building out the digital operating model (i.e., digital processes, new IT infrastructure, etc.)
- Strengthen services delivery capacity internally or through partnerships
The report suggests IoT’s impact on insurance will play out over a ten-year time frame. The time to negotiate and start testing with potential partners, experiment with potential IoT data marketplaces, and refine IoT business cases and strategic decisions is now.
Link to Source:: click here