The Embrace of IoT: Current Insurance Landscape and Possibilities
Internet of Things or IoT, as we call it, is changing the way we lead our lives. Tiny devices that can get embedded anywhere, whether it’s your car or your house are transmitting data that can enable companies to proactively track your needs and deliver superior results.
The insurance industry is headed for a revolution of sorts as it embraces IoT. Today insurance companies can leverage IoT solutions to mine colossal amounts of data and deliver superior customer experience. They can use real-time data to personalize services while reducing risks and costs.
However, IoT being a new technology brings with it a slew of challenges. Insurance companies looking to implement IoT solutions will face challenges in terms of security, standardization and compliance. And here’s what insurance companies have to deal with while deploying IoT solutions.
Security: Any IoT ecosystem is vulnerable to cyber-attacks. Companies should lay out a robust and end-to-end security roadmap before deploying an IoT solution.
Managing Disruption: Deploying IoT has the potential to disrupt traditional business models. Insurers need to ensure the right balance between IoT solutions and their core business models so that they optimize costs while reaping huge business benefits.
In addition to IoT, Insurers will have to understand and adopt other technologies as IoT devices need to be integrated with traditional IT and new technologies.
Natural Language Processing (NLP): IoT devices can be extremely beneficial at homes where senior citizens live. NLP capabilities will help insurers deliver the most efficient services in such cases.
Blockchain: This is another new technology that insurers can use. Roadblocks such as inorganic scaling of IoT devices (without identity or interoperability) and information and privacy concerns can leverage the fundamental principles of Blockchain.
Blockchain comes with its own baggage of challenges, hence we recommend a thorough study of the problem scenario.
Artificial Intelligence: IoT generates massive amounts of data and such data has no use unless you have machine learning capabilities. As the volumes of these data will surpass human capabilities, Insurers will need machine learning and AI technologies to crunch, interpret and gain actionable insights.
IoT solutions have the potential to impact insurers and the insured both positively and negatively. On the positive side they provide real-time data which helps Insurers and the Insured to take proactive action and cut losses. On the other hand IoT presents both financial and physical risks as it involves connecting with various devices on the Internet. But having said that, IoT has the potential to transform the insurance industry. Here are a few trends we foresee moving forward.
Insurers can innovate: The need for cyber insurance products will grow and Insurers can innovate and come out with a bouquet of cyber insurance products
Insurers will have to find new ways to cover risks: Cyber-attacks on IoT devices will bring new risks and Insurers will have to find innovative ways to manage these risks.
IoT has the potential to shrink the insurance market: IoT can minimize risks for the insured. It has the potential to lead to reduction of loss impact or avoidance of loss in some cases. Insurers will have to innovate to stay competitive.
IOT standardization will impact your operations: IoT involves connecting to multiple devices. Standardization in IoT is at a nascent stage. It’s only after the standards set in will you be able to make the most out of your IoT deployment.
To conclude, IoT in insurance should be reviewed as one of the disruptive technologies that needs some attention. A good understanding of the benefits and challenges of IoT devices and their applicability in insurance space will help carriers to keep up with the fast-paced changes.