28 Sep How Internet of Things May Transform the Insurance Industry
Life is unimaginable without smartphones. We are connected to each other in a way we were never before. We rely on it not just to be in touch with family and friends but it has become an indispensable object in our professional lives too. We are continuously evolving as technology-driven population. Digitization is making the world a smaller place by allowing us to connect and exchange information in no time. This inter-connection of digital information is analyzed and consequently a conclusion is provided as feedback which leads us to a means of control. This internet of things is making our day-to-day processes easier and our lives simpler.
What is Internet of things?
The internet of things or IOT is an innovation made that is and will keep on transforming businesses and processes for better usage of resources and for increasing the satisfaction level of services derived. IOT means any object with a capability to transmit data through Wi-Fi, bar codes, Bluetooth, sensors or radio frequency identification. This object can be a medical device, home appliance, wearable device (even clothing), cars, or anything with a unique identity.
For instance, there are home smart devices that are synchronized with each other and can be controlled remotely. The ever-evolving IOT is making it only efficient as the user is able to control devices as per their usage and save resources.
IOT and insurance industry
When it comes to insurance, IOT can provide the data insurers are looking for to gauge the level of risk. The feedback received from such devices can be helpful in controlling processes accordingly and decrease the possibility of loss.
Till now insurers priced their products on the basis of the historical data and some missing facts make it impossible to understand the accurate level of risk. Moreover, it is not possible to determine the current state of the insured. The IOT can change the way insurers carry on with their operations, design their products in the first place and bring change in the method of their pricing in entirety besides settling claims. Policyholders, on the other side, will be able to pay reduced premium and other related costs. In short, the process of providing insurance, servicing the policies and settling the claims will be much more efficient and transparent in terms of processes.
Impact on car insurance sector
There are devices launched for car to record the driving data. These devices are meant to record the acceleration and pattern of brake-usage and many more things that give the idea about your driving style. This kind of device is especially useful for insurance companies providing car insurance. The data received from such device allows the insurer to understand your driving style and assist them to determine the reasonable premium rate.
Apple has already introduced a feature called CarPlay that comes inbuilt in Ferrari, Mercedes-Benz, Honda and Hyundai. BMW has recently added a telematics device and has partnered with Allianz to bring convenience in providing car insurance.
Impact on healthcare and health insurance sector
According to IBM, IOT can prove to be a boon for the insurance sector in India. It can transform the way insurers run the business especially in health insurance sector. People can avail healthcare services in a much easier and an enhanced way. Wearable devices such as fitness bands can help people especially elderly people to track their health details constantly. This information can further help doctors treating the patients requiring immediate medical attention. Insurance companies, at the same time, can reduce their claims by offering incentives to their policyholders to use these kinds of devices. Insurance companies can also improvise their services by sharing health tips with their policyholders through IOT as well as verify the claims raised by policyholders through the data available from the devices.
Similarly, information derived from inter-connected smart devices at home can also be utilized by insurance companies to determine the safety maintained at home. Central system of the devices can inform the insurer that it was at higher risk the previous night as compared to the night before.
In the first place, smart devices used at home can help policyholders to keep an eye on their home while they are away. This would decrease the unfortunate incidences of theft or burglary and save people from losing their precious assets as well. Eventually, it would also bring down the claims raised by households.
Future scope of IOT in insurance industry in India
Data retrieved from various devices will need a well-built structure for storage. Moreover, data sent by device sensors may be received in a haphazard way. It can be either text or videos. So, it would not be just receiving the data but processing and organizing it and then analyzing it would also demand a strong infrastructure from insurers. High possibilities are there that only big players with resources would be able to leverage IOT.
Another more important concern is privacy. The web of connected devices is of course making things transparent but at the same time, it is also leading people to compromise on keeping their data private. The insurers would have to sacrifice on privacy to use the technology or they will have to expend additional amount to enable the system which would prevent browsers to track their private data.