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IoT helps insurers join points

The value of the Internet of Things (IoT) for the insurance industry is being understood, but there is plenty of room for even more innovation.

The roots of IoT applications in insurance lie in how telematics was used to support the first blackbox insurance for younger drivers. For example, we talked about the first applications of this technology more than a decade ago at the BBC.

However, the potential role of IoT in insurance is much more than just car insurance. This is clear when considering the large number of IoT devices in use. It has been predicted that there will be 30 billion IoT devices with a global market value of $ 7.1 billion by 2020. (Source: IDC). These are impressive mega numbers, but what is really remarkable is to consider the global IoT market by subsector.

For example, connected cars represent only seven percent of the global market compared to 26% of smart cities. This should not underestimate the importance of insurance linked to IoT for cars, as it is likely that the level of smart connectivity in car manufacturing will increase.

The proliferation of IoT that tracks driving behavior and facilitates personalization of car insurance coverage has the potential to generate new sources of income. McKinsey has talked about additional revenues of $ 1.5 billion by 2030 from the sale of on-demand and data-based mobility services.

A portion of this could go to insurers, some of which are already identifying initial opportunities. For example, Allianz offers insurance for Drivy, the leading car rental market in Europe. The service allows each user to rent a car to someone within walking distance of the tenant’s house when necessary, whether they go on a weekend, attend a business meeting or organize a move. The interesting thing is how vehicle owners can also rent their own vehicles in Drivy.

Smart cars aside, the IoT global market share report highlights a range of clusters, dominated by cities, industry and health.

A fifth of the IoT market currently includes connected health devices, which are generally wearable. These can be a very effective and non-invasive data source for risk assessment and evaluation purposes. Connected wearables can collect metrics to assess risk in less time than a complete medical exam. They also offer insurers an opportunity for consumer participation, providing customer value beyond insurance protection.

Just as important, wearables can be a useful tool to prevent and mitigate claims for workers’ compensation and general civil liability. A great example of this is Relinex de Kinetic, developed by a team of biomechanical engineers. This is a smart portable device that vibrates when an employee exhibits high-risk postures, such as lifting heavy objects incorrectly. Over time, workers can use Reflex to improve their biomechanics, resulting in fewer injuries and better well-being. The company says its technology can reduce insecure postures by up to 84%.

IoT devices are becoming familiar features in more homes and commercial buildings, offering another opportunity for insurers. Location-based sensors can reduce the risk of fire and theft, as well as collect valuable data when assessing a claim or managing repairs. We are all familiar with the way that heat and motion sensors, in addition to cameras, could be useful. There are also new IoT devices ideal for commercial buildings that insurers could promote to reduce the risk of property damage. For example, a UK company called Plumis has developed an intelligent system of connected sprinklers. All activity is stored in a “black box” to help investigate a claim. When the system is not active, it adopts a “dry pipe” approach so that they are less susceptible to leaks and explosions of frozen pipes.

Of course, any large-scale adoption of IoT technologies by insurers will require them to significantly renew the way they collect and analyze the data. A study last year suggested that most insurers were not prepared to do this even though they had recognized the importance of IoT. With the increasing use of data analysis by insurers, this doubt about IoT data will likely change. And, of course, the extent to which Big Tech brands are populating homes and offices with a variety of connected devices could also be a catalyst for insurers to pick up the IoT baton with more force.