IoT: the tech that’s transforming the insurance industry

Published On : 09/18/2019

By Phil Skipper, Head of Business Development at Vodafone Business

The term ‘digital disruption’ is everywhere and considering the rapid developments in technologies like machine learning, artificial intelligence and IoT, it should come as no surprise.We are talking about a revolution that doesn’t just indicate a change in perspective, but an actual shift in business logic across all industries.

This is particularly true for the insurance sector,which has much to gain from adopting new technologies. Many players in the field are already using them –in particular IoT – not just to monitor, but also create behaviour-based policies and to re-invent customer services and redefine the relationship between the insurer and their clients.

IoT is a data-business and so is insurance

Accurate and timely data that gives a clear understanding of risk, the ability to monitor behavioural patterns and get precise and instant reports in the event of a fault, theft or an accident, are all crucial to a successful digital insurance enterprise. IoT is the best way to achieve that data-clarity and enable the new digital processes that will underpin insurance as a connected service.

While it’s true the scale and success of the insurers is often a barrier to change, insurance companies are now realising digitalising their core business processes,and creating a viable roadmap for change, is critical to enable transformation at speed and remain competitive.

As part of this process, insurance firms also need to consider future technology trends, the change in customer expectations as well as external factors, such as connected mobility and the ecosystem of partners on which these new services will rely. Taking a holistic view of digital disruption helps to assess a firm’s strengths, weaknesses, opportunities, threats and identify where they want to play in a new digital industry.

IoT adoption in insurance 

The evolution and more wide-scale adoption of IoT provides fertile ground for digital transformation in the insurance sector. In fact, according to research from Vodafone’s IoT Barometer, IoT adoption in the insurance industry has already reached 35%.

IoT can simplify and improve the standard insurance model, helping speed up claims applications and risk assessments, as well as providing assistance and performing predictions relative to the driver profile. It can also enable entirely new products, like usage-based bike and motor-insurance programmes, and can even be used to encourage better user-behaviour.

Taking all this into account, it’s not surprising 84% of insurance adopters say their core business strategy has changed because of IoT.

Another interesting aspect to consider is the power digitalisation through IoTis having in drastically changing the relationship between insurance companies and their users.

Historically, insurance companies were seen as organisations you only got in touch to buy a policy or make a claim.Thanks to IoT, many of these operational processes can be automated, dramatically improving customer satisfaction.  For instance, detecting or responding faster to accidents, gathering information for a claim, using photographic or video information and reconstructing the sequence of events prior to the incident are all possible using the connected capability, data and analytics that comes with IoT. At a time of stress, these capabilities significantly enhance the customer experience, simply the claims process and can drive out cost through automating first notification of loss (FNOL).

However, the change is not just around the more efficient handling of claims.

By connecting to the customer using a black box in the car or via a smart phone or plug-in dongle a new channel through which advice, rewards and additional services can also be created.These services not only help manage the risk by encouraging good driving behaviour but can also be used to provide a range of top-up services that increase the value of the relationship between the insurance company and the user.

The same approach also extends far beyond motor insurance. Alerting a homeowner to an open window, remotely enabling the alarm, monitoring for water leakage all mean that the business model is shifting from a reactive to a preventive one, drastically changing the relationship with the customer.

Improving the future

IoT technology is becoming a central element in the digitalisation of many different industries;this is creating new ecosystems of connected services that provide new channels and ways of working. With the advent of shared mobility, peer-to-peer car sharing and short-term property letting, the opportunities for insurance companies to provide consumption-based rather than subscription-based cover increase significantly.

IoT provides the mechanism to enable and disable access to the asset, define the start and end of the period of coverage and even help monitor how the asset is being used. This provides a new way to assess and monitor risk, providing the basis for micro insurance services.

The impact of connected insurance services and IoT technology also has a wider societal benefit, paving the way for smarter, more efficient cities. In the short-term, the data produced can improve traffic checks and routing, monitoring emission and ultimately help make streets safer. In the long-term, the same data can contribute to the development of smart integrated transport, smart cities and support the shift towards a smarter, safer, and cheaper future for people all over the world

The role of IoT in the digital transformation of insurance 

The great amount of data IoT offers insurers access to is the key to their future growth. Those who can leverage this data and look at implementing analytics and machine learning tools that rely on it can realise significant operational benefits, but those that use the data to transform can achieve wider long-term advantages.

By providing an accurately measured risk environment based on actual data and behaviour, digitalising with IoT also creates the opportunity to re-invent how insurance is considered and perceived by customers. By using IoT technology, insurers can offer more bespoke tailored products,when customers want them, in a way that is easy to consume.

Digital insurance, whether for motor, home, health or travel is already enabled through IoT. It’s therefore essential leaders in the sector recognise its power and keep exploring the opportunities it has to offer.

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.