How Internet of Things Revolutionize The Insurance Industry

By Subodh / January 25, 2016

The internet has become a compulsory part of modern life- silently, but in all pervasive ways over the last decade. Like anything that is technological innovation, the Internet keeps evolving over time. The way you access and use the web is also changing fast. Web access is no longer limited to PCs and millions of tablet and Smartphone users depend on mobile devices to browse, download and consume web data. With time, web access is spreading to more devices, including home appliances. The much discussed Internet of things is likely to become mainstream in the next decade or earlier, say the technology experts.

Internet of Things May Transform the Insurance Industry

Internet of things, will impact a lot of things in human life, including media consumption, gaming, interactive and even various industries. The impact will not only be limited to how people shop, do their laundry or play games. It will have an impact on the insurance sector in an unprecedented way.

Impact of IoT on Insurance Sector

Insurance is a necessity most people cannot do without. For safeguarding health, life, car and property- you need insurance. However, Insurance sector is yet to gain big time from advancements in technology and this is where IoT can prove to be a game changer.

So, How the IoT is going to benefit the insurance industry? It will offer the players in this sector more way to reach out to the customers, study and understand their preferences, lifestyle and priorities in life and plan their strategies accordingly. The problem of relying on assumptions and gap with the customer will be effectively fulfilled once the IoT is embraced by the mass.

4 Ways Insurance Sector Is Going To Benefit From IoT:

1. Abundance of Data

As of now, the insurance companies rely mostly on conventional methods to learn about their customers and their needs and priorities. Unless a clear understanding of health, finance, lifestyle of customers is obtained, insurers cannot understand which policy will suit a particular client. So far, they depend on printed forms, questionnaires, email and online forms and verbal communications to learn these aspects. As IoT become more powerful these firms will not have to interact with the customers much or prod them for the details! As devices like wearables, fridges and microwaves are all connected and exchange data between them and other devices, tracking life of people become easier. The insurers can get accurate and enough data for analyzing the needs of their customers.

2. Better Policy Recommendation

As of now, insurance companies and their agents rely on data collected from the internet and customers to recommend policies to them. However, a section of this data is based on an assumption. As they get accurate and intensive data owing to the proliferation of IoT, they will be able to suggest more suitable policies to clients. For example, by monitoring food shopping pattern and spending of a customer, the insurance firm can figure out his or her health condition and suggest a policy that is apt for the person. Moreover, the health insurance firms can better understand existing health condition of a prospective customer.

3. Less Intrusive Communication

With IoT on the way, insurance firms will find many more ways to reach out to their customers without taking up much of their time. Along with smartphone notifications, emails and phone calls, there will be many more ways to inform customers about issues like policy expiry, about new policies or discounts on any policy. This will eventually lead to more revenue generation for the insurers.

4. Accurate Premiums

The premium of any insurance policy, whether it is a vehicle or health insurance is calculated on various factors and a lot of these are still assumed. When the role of assumption gets reduced it will also reflect on premiums in a positive way.

Points of Concern

While IoT can revolutionize insurance industry a few issues need to be taken care of.

First of all, gathering a humorous amount of data and processing it can prove to be changing. Besides, issues like user privacy also need to be addressed. Users will want to keep some amount of their data private for practical reasons. So, provisions for data safety and extensive data management and processing need to be in place.