Role of IoT in Insurance

Did you know that the latest fancy wearable device that you may have bought to monitor your daily health goals also holds significant data about you? This data, when shared with a health insurer can ascertain your exact health insurance risks. Likewise your car insurance quotes are likely to be customized as per your individual car driving behavior monitored by ‘Usage Based Insurance’ (UBI) devices placed on your vehicle.

Innovation has been the name of the game for the insurance sector at large. The influx of new insurers brining in newer plans over time has meant that insurance companies have always been on the look out to create innovative plans. The growing use of new generation technologies like big data and Internet of Things (IoT) are today offering insurers the platform to offer innovative plans based on technological parameters adding value both for the policyholder and insurer.

So what exactly is IoT?
Internet of things or IoT is a sophisticated network allowing multiple connected devices which are able to share and exchange real time data. IoT can help enterprises to collect and analyze consumer data and then decode the data to offer better services. The services offered thus can be more customized and streamlined as per the needs and risks of each individual.

Understanding the role of IoT in insurance
With number of interconnected devices projected to reach 50 billion come 2020, IoT and big data are likely to have an ever increasing impact in the insurance sector. Many insurers have already started leveraging the power of IoT to offer customized insurance solutions. For example, offering faster claims using drones to monitor and ascertain claims especially for home insurance. Here is a look at the three essential aspects of how IoT is acting as a game changer for the insurance sector as a whole.

Smart Wearable’s and their significance for life and health insurance
Smart wearable devices and health trackers are today arguably one of the most popular gadgets. While such wearables help individuals keep track of their health goals, the data accumulated is also a virtual goldmine for insurance companies. Insurers can make use of the data to evaluate risks assessment for each policyholder and then offer customized life insurance quotes as per their risks. Insurers are able to decode data to improve underwriting and reduce the cases of possible frauds in life and health insurance.

UBI and automobile insurance
Car insurers are now leveraging the power of IoT by using usage based insurance or UBI, helping them monitor how a car insurance customer drives. Such ‘telematics’ based devices allow insurers to seek apt driver risk assessment like exceeding speed limits and checking on breaking and acceleration gradients. Eventually if you are a good driver following all road etiquettes, the corresponding data can help you get a lower car insurance premium compared to a high risk driver exceeding speed limits or prone to rash driving.

Role of IoT in home insurance
Using smart home devices like smoke detector alarms or theft safety mechanisms using various sensors are usually some of the important yardsticks to ensure low premium for home insurers. IoT can help insurers understand the nature and type of smart home devices. This leads to lower risks and eventually lower premiums for home insurance. Lower premiums would mean more people are likely to opt for home insurance leading to higher penetration in the home insurance market. Insurers have also been making use of drones to seek and access damage caused by natural calamities to capture images and speed up claims without relying on agent or claim assessment officer visits.

Conclusion
Internet of things (IoT) and big data are technologies that are changing the world of business. Insurance sector is no different as it embraces technologies like IoT to offer customized solutions and eventually lower premiums for the consumer and lower risks for the insurance companies.