The insurance industry is a critical growth area for IoT innovation (which we will be exploring at the upcoming IoT Evolution Expo in Las Vegas in July) because the built-in ability to monitor, collect and analyze data from sensors can allow the insurance industry to offer more personalized policies and make more accurate calculations of risk. This is backed up by industry analysts at Beecham Research in a new ‘Internet of Insurance Sector Report.’ By building up an accurate and detailed picture of behavior, insurance companies will be able to offer precisely-customized products and services to deliver better value for money and increase customer retention, the report said.
In addition to improved customer targeting, the report says that insurers will be able to verify claims more reliably and rapidly, thanks to a greater wealth of data, saving time and costs. The open nature of the IoT will also enable non-sensitive data stored in different systems to become exchangeable and interchangeable, which can support better understanding and decision making around assurance.
“Insurers are placing increased emphasis on customer relationship management and crafting more personalized policies rather than those simply based on pooling historical knowledge,” said Olena Kaplan, Senior Analyst, Beecham Research. “It’s no secret that customer retention is a significant challenge for the insurance industry and we believe the personalization of policies will go a long way to solving this for companies that embrace IoT technology.”
The report goes on to warn insurers planning an IoT strategy that all sensor-derived data must be safeguarded from compromise, theft, corruption or loss, not only because of Data Protection Legislation, but also to preserve consumer trust by ensuring that they understand how data will be used and secured.
“As the IoT grows, so will the risk of exposure to breaches, unless preventive measures are taken,” said Kaplan. “The insurance industry is already on the brink of major changes driven by big data and the IoT adds a further exciting dimension in digitization that will cause an overhaul of the insurance business.”