IoT devices are helping consumers and insurers get smarter with each passing day as these technologies bring promising results in helping insurers reshape how they assess, price, limit risks and enhance customer experience. (Photo: Shutterstock)
The Internet of Things (IoT) is predicted to support more than 20 billion devices by 2020, according to Gartner. This is a market that comprises 60% of consumers worldwide, creating huge opportunities for industries to connect and engage with their customers.
Connecting with consumers hasnâ€™t always been easy. Contact typically took place at points of sale, claims and renewal periods. Now, with the use of wearables, smart homes and telematics, insurers are connecting with customers on an ongoing basis and providing valuable feedbackÂ â€” and pricesÂ â€” based on activity levels.
The business of insurance is complex in nature with core factors such as risk evaluation, long-term contracts and unpredictable settlements. However, the benefits of InsurTech and the unlimited availability of new sources of data that can be exploited in real time have fundamentally altered how consumers interact with their insurance providers.
IoT devices are helping consumers and insurers get smarter with each passing day as these technologies bring promising results in helping insurers reshape how they assess, price, limit risks and enhance customer experience.
Numerous technologies have shown how improved connectivity can generate new opportunities in the insurance industry beyond personalized premium rates. If implemented properly, IoT applications could possibly boost the industryâ€™s customarily low growth rates. It may help insurers break free from traditional product marketing and competition primarily based on price to shift towards customer service and coverage differentiation.
Several technology trends that are increasing connectivity in insurance include:
Extended Reality (XR) â€“ XR technologies are altering the way consumers connect with society, information and each other. Extended reality is achieved through virtual reality (VR) and augmented reality (AR), which aim to â€śrelocateâ€ť people in time and space. Eighty-five percent of insurance executives in Accentureâ€™s Technology Vision 2018 survey believe it is important to leverage XR solutions to close the gap of physical distance when engaging with employees and customers.
Wearable Sensors â€“ Reports indicate that the average consumer now owns 3.64 wearable devices. These technologies can mitigate claims fraud and also transmit real-time data to warn the insured of possible dangers. For example, socks and shoes with IoT apps can alert diabetics on possible odd joint angles, foot ulcers and excessive pressure, thus helping in avoiding costly disability and medical claims and even worst-case scenarios such as life-changing amputations.
Commercial Infrastructure and Smart Home Sensors â€“ These sensors can be embedded in commercial and private buildings to help in monitoring, detecting, and preventing or mitigating safety breaches such as toxic fumes, pipe leakage, fire, smoke and mold. This in turn increases the possibility of saving insurers from large claims and homeowners from substantial inconveniences such as lost property or valuables. Savings can be passed to insureds that use these sensors.
Usage-based Insurance (UBI) Model â€“ Cellular machine-to-machine (M2M) connectivity and telematics link drivers and automobiles in entirely new ways. Traditionally, auto insurance has relied on broad demographic features such as gender, credit score and the driverâ€™s age to set premiums. Now, through IoT devices, insurers can not only offer reward-based premiums but can provide a connected car experience to customers with feedback on weather, traffic conditions or driving habits.
Strategy will play an important role in connectivity as insurance carriers transform legacy core systems into digital platforms that support deeper connectivity with their customers. This strategy must address a carrierâ€™s ability to handle, process and analyze the new types of data that will emerge from the use of these technologies. Artificial intelligence will also have a big impact.
According to a recent study, 80% of insurance customers are happier and more content when they can connect with their insurance providers through various channels such as phone, emails, smartphone apps and online. Through the use of the IoT and connected devices, insurers will improve customer experience by shifting from reaction after an event has occurred to proactively preventing losses digitally.
Mike de Waal is president and founder of Ottawa-based Global IQX (www.globaliqx.com), a leading software provider of web-based sales and service solutions to employee benefits insurers. He can be reached at [email protected].