As people and devices get more connected to each other through the wonders of technology, the Internet of Things or IoT is consolidating its position across industries. As of 2020, it was anticipated that the total number of IoT connections would range around 30 billion, averaging four IoT devices per person.
These IoT devices are easy to use, provide quick installation, and can be a rich source of high-quality user data in real-time. As a result, IoT solutions are no less than a blessing to the insurance industry. The benefits of IoT are particularly prominent in the health insurance segment.
This post explores how IoT can improve profitability in the insurance sector, along with a practical example.
Identifying IoT Ecosystems in Insurance
Before we deep-dive into how IoT boosts insurance, let us look at the various terminals that can act as rich sources of data. Following is a list of viable IoT solutions that are being tapped to gain customer information:
Wearable devices would play a major role in driving the health insurance industry forward. Through these sensors, insurers can gain access to real-time health conditions, and changes, if any. It also acts as a window into the lifestyle and quality of life of the individual. As such, businesses can adjust the policies based on these critical factors and also offer immediate help in case of emergencies.
Even though smart home technologies are still in its nascent stages, it promises immense potential once it registers an uptick. IoT devices that elevate a “home” to a “smart home” can be particularly useful in home insurance plans. The seamless integration of smart doorbells, security systems, and home appliances will also make homes safer.
Not just individuals or devices, even businesses are connecting with each other through IoT solutions. As a result, data harnessing is also prevalent in B2B settings and operations. Insurance can tap into various value chains existing between companies to gain third-party information on the customers and industries.
While autonomous cars may be a thing of the future, vehicles equipped with telematics technologies are very much a reality in the present. As the auto industry becomes more technologically forward, it is bound to generate high volumes of data through IoT. As such, it appears to be a promising avenue in auto and vehicular insurance offerings.
Advantages of IoT in Insurance
Whether you are looking at IoT in health or product insurance, here’s how it enhance your business:
● Insurance businesses can become custodians of historical and real-time data, which will offer deep insights into customer behavior.
● Intimate knowledge of the customer allows insurers to extend personalized products and services.
● Insurance agencies can assess customer sentiment, pain points, and expectations to discover alternate revenue streams by diversifying their value proposition.
● It can help in embracing a customer-centric mindset that improves their experience and cultivates loyalty.
● IoT can lend insight into the procedural inefficiencies that are eating into your profits.
● Data from IoT terminals can be fed into predictive analytics models that can introduce a proactive approach to risk rather than a reactive one.
● IoT in health insurance also lays the groundwork for preventive care rather than reactive risks and losses.
● As IoT devices can capture the severity of claims incidents, it brings down the time and effort involved in claims assessment.
● Insurers will no longer have to rely on inspectors and adjusters to evaluate claims, which will prevent leakages and losses.
● Given that IoT fuels a data-driven framework, it leaves room for automation, which can reduce costs by nearly 30%.
From the above, it is evident that IoT solutions bolster insurance across various verticals and bump up the bottom line wherever possible.
The adoption of IoT in insurance will pose challenges like the issue of data security, privacy, management, and ownership. However, the rapid rate at which consumers are incorporating IoT devices in their day-to-day lives will be a key driver to developing ways to overcome these roadblocks. As a result, it would still be a conservative estimate to state that IoT solutions are set to change the face of the insurance industry!