IoT to change insurance
The ability to monitor, collect and analyse unprecedented volumes of real-time data from internet-connected sensors will allow the insurance industry to offer highly personalised policies and make far more accurate calculations of risk.
The prediction comes from industry analysts at Beecham Research in a new ‘Internet of Insurance Sector Report’. It claims that by building up an accurate and detailed picture of behaviour, insurance companies will be able to offer precisely-customised products and services to deliver better value for money and increase customer retention.
The rapid emergence of the Internet of Things (IoT) will see millions of connected devices measuring virtually anything in the physical world, from weather conditions and vehicle telematics to personal activity and health vital signs. This new level of real-time or near real-time information will help insurers to assign scoring values to adapt and tailor their policies and premiums with far greater granularity.
In addition to improved customer targeting, insurers will also be able to verify claims more reliably and rapidly, armed with a greater wealth of data, saving time and costs while delivering a better service.
‘Insurers are placing increased emphasis on customer relationship management and crafting more personalised policies rather than those simply based on pooling historical knowledge,’ said Olena Kaplan, senior analyst at Beecham Research. “’t’s no secret that customer retention is a significant challenge for the insurance industry and we believe the personalisation of policies will go a long way to solving this for companies that embrace IoT technology.’
But Beecham Research also warns that all sensor-derived data must be safeguarded from compromise, theft, corruption or loss. ‘As the IoT grows, so will the risk of exposure to breaches, unless preventive measures are taken,’ says Olena. ‘The insurance industry is already on the brink of major changes driven by big data and the IoT adds a further exciting dimension in digitisation that will cause an overhaul of the insurance business.’