Skip directly to search

Skip directly to content

 

How IoT is Changing Insurance

 
 

Insurance Insights | Vince Francis |
02 May 2023

Have you ever wondered why you only talk with your insurance company every so often? Although you and your provider share aligned goals, communication often only occurs at specific points in your journey. This interaction model can be traced to the legacy systems employed by your provider, which were designed to support an annual policy. However, just because the policy is annual doesn't mean the interaction model has to be.

But what if your provider could offer more valuable services based on the data and infrastructure available to them? What does that do to the interaction model? Imagine how insurers could use automation and technology to provide more personalized and enhanced insurance products to consumers.

The Internet of Things (IoT) represents a new era of connected devices that not only collect and transmit data but also help simplify our lives. The power of these IoT devices, combined with innovative processes and provider support, will drive bespoke, accessible products that benefit both insurance providers and their subscribers.

In this post, we'll explore some of the top benefits of IoT devices in different types of insurance and how insurers can leverage these devices to improve the customer experience.

Benefits of IoT for Homeowners and Renters

In the homeowners insurance sector, a collection of IoT devices already exists, designed specifically for residential use. Their adoption benefits both homeowners and insurance providers. As providers utilize these devices, the data and insights they generate can offer standard loss protection and help prevent loss altogether.

For example, water damage is one of the largest causes of homeowner claims, responsible for approximately 30% of all claims each year. Companies like EcoNet produce IoT shut-off devices that can be attached to the main water inlet in your house.

These devices, starting around $200, can be installed directly by homeowners, allowing them to automatically turn off all water to the house when they are not home. Depending on the model, these devices can even dynamically shut off the water if a leak is detected. In short, this IoT innovation effectively prevents runaway leaks in your home.

Restricting water flow drastically changes the risk profile of water damage, just as a home security system alters the risk profile of burglary. This lower risk profile, specific to you and your home, can result in reduced insurance premiums. Providers can assume this lower risk by leveraging technology to shift from a loss coverage scenario to a preventative action scenario.

With these devices installed, insurers can offer the same product or coverage at a discount due to the lower risk profile. Many insurers offer discounted rates for installing water shut-off devices. Liberty Mutual offers discounts for "smart homes" powered by Nest products, and Desjardins goes a step further with its "Discover Alert Program," providing discounted rates and hardware purchase discounts.

Benefits of IoT for Other Types of Property and Casualty (P&C) Insurance

Reducing the risk of water damage is just one example, but the advantages of technology and IoT don't have to stop at home. Automotive insurance is beginning to use in-vehicle sensors, which can determine the likelihood of an engine failure or a brake line leak.

On the commercial side, insurers are employing technology like GPS tags and LoRa sensors for precise product tracking. Manual inspections and loss inspections can also be supported by digital tools like web conferencing, web cameras, and drones to streamline the process.

Taken to the fullest, insurers can leverage new technologies to offer episodic insurance (sometimes called on-demand insurance) to micro-optimize coverage for specific user needs. Even at the macro level, this technology and its associated power is driving a step change felt throughout the industry.

The emerging landscape of monitoring, control, and automation is creating a bold new world of technology that directly and tangibly benefits users. Simultaneously, these technologies supply data and information that allows insurers to offer bespoke, user-specific solutions that provide both loss coverage and prevention systems.

The Potential of IoT for Other Lines of Insurance

Outside of P&C insurance lines, IoT has the potential to impact and improve other forms of insurance, such as medical insurance and kidnap and ransom.

Telematics: This form of machine-to-machine communication can help determine real-time breaches of warranty for the shipping industry. Telematics could also assist fleet operators in ensuring their drivers rest for the required amount of time and adhere to speed limits.

Wearable Devices: Medical wearables, including smartwatches, can help insurers identify patient health statistics, such as blood pressure and heart rate. In another example, IoT sensors could be embedded into devices such as pacemakers to transmit health information directly to patients and providers.

Finding a Way Forward

As insurers adopt IoT devices more widely, there are bound to be challenges with the large volumes of data these devices produce. To make the most of IoT data, insurers will need strategies for organization and algorithms to identify consumer behavior patterns. With streamlined IoT data, insurers will be empowered to better support their customers as they encounter issues—even anticipating where support is needed—leading to a more seamless journey overall.

IoT devices and their capabilities are evolving rapidly. Whether managing water or power, monitoring occupancy, or tracking assets, the list of capabilities grows almost daily. More important than the specifics of what any one device can do is the change (and ongoing dialogue) these devices enable between customers and insurance providers.

To learn more about how Endava can help insurers adopt IoT by building data platforms and finding ways for disparate technologies to work together, visit us here.

Tags

Vince Francis

VP Delivery Acceleration – Canada

Vince Francis is a creative, results-driven technology leader with 20+ years of leadership experience. Serving as Endava’s VP of Delivery Acceleration for Canada, Vince is experienced in information technology, development, R&D, and strategic planning.

 

Related Articles

  • 30 March 2023

    Cage of Reason: FCA's new Consumer Duty heralds the rise of the 'Reasonable Insurer'

  • 22 November 2022

    The Era of Ecosystems and the Rise of Open Insurance

  • 06 April 2021

    Insurance Insights: Low Code

  • 30 March 2021

    Insurance Insights: Intelligent Underwriting Workbench

  • 16 March 2021

    Insurance Insights: Customer Retention & Cross-Selling

  • 09 March 2021

    Insurance Insights: Cloud Migration

  • 23 February 2021

    Insurance Insights: Data Exploitation

  • 16 February 2021

    Insurance Insights: Open Insurance

Most Popular Articles

IN-AI-ENABLE RIGHTS: DO WE HAVE THE RIGHT TO STYMIE THE DEVELOPMENT OF ARTIFICIAL INTELLIGENCE?
 

Insurance Insights | Kevin Crawford | 02 June 2023

IN-AI-ENABLE RIGHTS: DO WE HAVE THE RIGHT TO STYMIE THE DEVELOPMENT OF ARTIFICIAL INTELLIGENCE?

The Time Is Now to Start Thinking About Real-Time Payments
 

Payments | Monica Velez | 31 May 2023

The Time Is Now to Start Thinking About Real-Time Payments

An Anatomy of the Data-Driven Retail Supply Chain
 

Transportation & Logistics Insights | Jeremy Eaton | 25 May 2023

An Anatomy of the Data-Driven Retail Supply Chain

BNPL Regulation to Protect Consumers and Control Third-party Lenders
 

Banking | Annmarie Mahabir | 23 May 2023

BNPL Regulation to Protect Consumers and Control Third-party Lenders

How Offer and Order Management Systems Are Expanding The Aviation Business Model
 

Mobility | Joachim Zintl | 17 May 2023

How Offer and Order Management Systems Are Expanding The Aviation Business Model

Salut! I’m Adriana Calomfirescu
 

Meet the SME | Adriana Calomfirescu | 16 May 2023

Salut! I’m Adriana Calomfirescu

Hi, I’m David Boast
 

Meet the SME | David Boast | 15 May 2023

Hi, I’m David Boast

The Business Impact of Fan Engagement: How to Leverage Technology to Improve Loyalty
 

Innovation | Robert Milner | 12 May 2023

The Business Impact of Fan Engagement: How to Leverage Technology to Improve Loyalty

Staying Relevant – Why Merchants should Embrace Alternative Payment Methods
 

Payments | Steven Purton | 09 May 2023

Staying Relevant – Why Merchants should Embrace Alternative Payment Methods

 

Archive

  • 02 June 2023

    IN-AI-ENABLE RIGHTS: DO WE HAVE THE RIGHT TO STYMIE THE DEVELOPMENT OF ARTIFICIAL INTELLIGENCE?

  • 31 May 2023

    The Time Is Now to Start Thinking About Real-Time Payments

  • 25 May 2023

    An Anatomy of the Data-Driven Retail Supply Chain

  • 23 May 2023

    BNPL Regulation to Protect Consumers and Control Third-party Lenders

  • 17 May 2023

    How Offer and Order Management Systems Are Expanding The Aviation Business Model

  • 16 May 2023

    Salut! I’m Adriana Calomfirescu

  • 15 May 2023

    Hi, I’m David Boast

  • 12 May 2023

    The Business Impact of Fan Engagement: How to Leverage Technology to Improve Loyalty

  • 09 May 2023

    Staying Relevant – Why Merchants should Embrace Alternative Payment Methods

  • 02 May 2023

    How IoT is Changing Insurance

  • 26 April 2023

    A Veteran Game Developer's Perspective on Tool Development

  • 24 April 2023

    How Digital Ecosystems Enhance the Healthcare Experience

  • 21 April 2023

    Green machines: how tech can help companies hit Net Zero targets

  • 20 April 2023

    The Role of People and Technology in the Future of Underwriting

  • 19 April 2023

    Media 2030: Why Advertisers and Publishers Are Racing To Find New Strategies

  • 18 April 2023

    Alright, I’m Adrian Sutherland

  • 14 April 2023

    How Synthetic Data Could Solve The Patient Privacy Dilemma

  • 11 April 2023

    Payments makes the world go round! How banks can get creative

  • 06 April 2023

    Higher Fidelity: Good Outcomes and Harnessing the Challenge of FCA's Consumer Duty

  • 05 April 2023

    AI in Pharma: How Machine Learning is Revolutionising Every Step in Drug Development

  • 04 April 2023

    Hello! I’m Leane Collins

  • 31 March 2023

    The Dos and Don’ts of Successful Carve-Outs in Private Equity

  • 30 March 2023

    Cage of Reason: FCA's new Consumer Duty heralds the rise of the 'Reasonable Insurer'

  • 28 March 2023

    A legal view on the ownership and future of AI-generated works

  • 24 March 2023

    Championing Women in Tech

  • 23 March 2023

    5 Ways Capital Markets Firms Can Ensure Resilient Operations to Improve Credibility and Efficiency

  • 15 March 2023

    Buenas! I’m Leticia Chajchir

  • 14 March 2023

    4 Ways to Improve Customers’ E-Commerce Search Experience

  • 28 February 2023

    4 Healthcare Innovations That Can Benefit People and Profit

  • 21 February 2023

    Hey, I’m Lewis Brown

  • 17 February 2023

    Top Considerations for Financial Services Providers Entering the Cross-Border Payments Space

  • 13 February 2023

    Better Together: Harnessing the Power of Digital Ecosystems

  • 09 February 2023

    What to Include in a Customer Re-Engagement Content Library

  • 07 February 2023

    Supercharging Wealth Management with Hyper-personalisation

  • 02 February 2023

    How Innovating the Insurance Customer Journey Creates a Competitive Advantage

  • 30 January 2023

    G’day, I’m David Marsh

  • 26 January 2023

    Empowering Underwriting and Unlocking Revenue with Legacy Insurance Data Sets

  • 24 January 2023

    Four Stakeholders Who Win the Most When Healthcare Innovates

  • 23 January 2023

    Journey to the Centre of the Cloud with AWS – Part 3

  • 20 January 2023

    Journey to the Centre of the Cloud with AWS – Part 2

  • 18 January 2023

    Journey to the Centre of the Cloud with AWS – Part 1

  • 17 January 2023

    The 4 Most Common Mistakes in Retail Site Design

  • 13 January 2023

    Boost and bolster your innovation. Three tips to help get it to the next level.

  • 10 January 2023

    5 Questions in Smart Energy That Will Define the Net Zero Transition

We are listening

How would you rate your experience with Endava so far?

We would appreciate talking to you about your feedback. Could you share with us your contact details?