A few weeks back we talked about the Internet of Things in a blog post and newsletter article. IBM has considered this so important they are now investing 3 billion into a new business venture to support the data and analytics that will come along with this new interconnected reality. IBM plans to launch an online service that helps insurance companies extract insight from connected vehicles, to create new pricing and services customized to individual drivers. The Weather Co. plans to shift and integrate its massive weather data operation into the IBM Cloud, so that insurance providers could send policyholders text messages alerting them to impending hailstorms and vehicles could be moved before being damaged, for instance. It could also help determine exactly how many people were hit by a natural disaster so insurers could respond to claims faster.

Because of this the industry is at the foothills of its transformation.  Insurers will be able to tailor risk measurement and claims management, forever changing insurance in a very big way. In addition, customers will likely hold more control for a pay for play (usage) kind of model.

Looking into the crystal ball here are some of the ways that the Internet of Things may impact the industry.

1) Risk Measurement: Auto

  • Auto theft: Changes to patterned driving
  • Fraud Detection: Unusual driving pattern or behavior

2) Risk Measurement: Connected Home

  • Usage Based (or occupancy rate): Unoccupied home
  • Claims management: Incident initiates a potential FNOL
  • Fraud Detection: Integration with Sensors

3.) Claims Management: Auto Similar to OnStar, the device in a carcould connect to the insurance companies service department and initiates an FNOL

4) Claims Management: Commercial Workplace Safety Employee biometrics to monitor special health needs of individuals

5) Loss Prevention Services: Commercial applications and personal

  • Route selection alerts: After a period of time, the common routes are detected with identification of which may incur greatest risk when traveled
  • Mechanical Alerts: Newer cars are providing TPS but other than saying they are low. This approach can advise of nearest ‘air station’ and suggest tire pressure
  • Mechanical Alerts: Brakes
  • Mechanical Alerts – Machinery: Machines call for check-ups, unusual wear patterns
  • Accident: Associations and Prevention
  • Risk areas: Also known as ‘hard hat’ areas

6.) New consumer models

  1. Usage Based Auto (true pay per mile): Number of miles per trip, per day, per week, per month
  2. Usage Based Home (or occupancy rate): Unoccupied home

 

What do you think about how the IOTs will impact insurance underwriting and servicing. Leave a comment below and start the coversation!