The digital transformation of the insurance industry is gaining momentum, by taking into account the growing popularity of machine learning and cloud computing technologies.
Notwithstanding the introduction of these technological enhancements, the overall industry remains mainly conservative still.
Mostly, the inclusion of innovations comes by following the successfully adopted technologies in other spheres. That’s what happened with smart devices, causing the IoT insurance segment to appear.
According to the prediction made by McKinsey researchers, the number of networked devices used globally will reach over 50 billion by 2025. In the given circumstances, there’s no surprise IoT innovations have already entered numerous spheres and industries.
And the insurance sector has nothing but to follow this trend in the near future. Be the first one among your competitors!
Check our overview of the current state and perspectives of IoT for commercial insurance to make a thoughtful move in helping your business catch the trend.
What Is IoT?
The Internet of Things is considered one of the most innovative and interesting spheres in the broader context of digital transformation, considering the wide range of opportunities and applications.
Specifically, these automatic devices can transfer huge data loads, process them in real-time, and react in a pre-programmed way. And all these processes happen with the aim to facilitate your life.
The common examples of IoT are connected cars and smart housing, or the set of technological enhancements to improve driving and living experiences.
All these devices can support insurance purposes, resulting in the industry of IoT in life insurance and auto insurance. Moreover, there exists a wide range of services that include home insurance and IoT.
IoT in Insurance: What Is It All About?
Even though the advantages of smart home devices and health-related wearables are quite obvious, the applicability of IoT solutions in insurance may sound a bit surprising.
Nevertheless, the Internet of Things in insurance industry is already bringing new opportunities to companies.
In general, the devices can introduce enhanced product design, find appropriate distribution channels, and reach more accurate decision-making.
Besides, the IoT innovation in insurance is capable of reshaping the activity of insurance companies in terms of price setting, managing resources, and limiting possible risks.
Since this set of benefits is not yet self-evident for the industry players, it’s highly recommended to introduce the technology now.
5 Key Tasks Assisted by IoT in Insurance
- Match customers and applications. The smart approach to adopting IoT is to detect short-term and long-term perspectives, along with extra factors that may affect the dynamics and interests of your target audience segments.
- Detect strategic partnerships. The insights gathered by IoT devices can show the weak areas you can empower by developing offerings and partnering with relevant technology providers.
- Support scaling. The IoT-powered ecosystem provides the stable ground for managing existing tasks and expanding your business activities.
- Process acceleration. Since smart devices are capable of processing tons of data in real-time, this shortens the time for delivering tasks and making decisions.
- Ensure long-term competitive advantage. For the generally conservative insurance industry, the smart introduction of IoT technology serves as the hidden strength to outperform your key competitors.
To sum up, the Internet of Things empowers insurance companies in terms of connectivity and opportunity. In other words, this technology architecture unites existing technical solutions in a new way to significantly boost low organic growth rates.
This becomes possible with smart segmentation and proper addressing of customer groups based on their typical behavioral patterns. This, in turn, increases the level of customer satisfaction and loyalty since your clients will get what they really want from you and enjoy better service quality.
8 Applications of IoT Opportunities in Insurance
Here are some successful ways of introducing IoT technology in insurance:
- Facilitated communication with customers. You can apply telematics apps to reach a high level of customer interaction.
- Claims processing. Insurers can prevent their income losses by avoiding speculative claims and preventing them from happening.
- Developing cross-industry products. IoT devices offer improved tools and can detect the problem areas in insurance. These insights are relevant for creating new services and establishing necessary partnerships.
- Smart housing. With the rising popularity of smart housing devices, connected home insurance is gaining momentum. The cooperation models include creating integrated products and offering insurance discounts for the most used devices.
- Making flexible pricing models. With the customer data collected, insurers can introduce new pricing models that will guarantee real value-for-money for customers. Moreover, you’ll increase your sales by offering your target audience what it really needs.
- Cybersecurity. IoT-enabled risk prevention may come in the form of sensors that protect the physical space or an enhanced capital-to-risk matching for the platforms that are trading insurance packages. For example, IoT for commercial insurance can prevent smoke and mold, mitigating a potentially dangerous event.
- Workplace safety. Employees can track their activity with wearables that assist in navigating high-risk areas and warning of a potential hazard on time.
- Healthcare insurance and IoT. Connected devices are widely used in medicine, sending alerts to doctors about possible diseases and treatment plan progress. For insurance, this data is used for preventing costly claims connected with severe injuries and disabilities.
5 Main Benefits of IoT in Insurance
1. Risk management
With IoT devices, you will collect direct customer behavior indicators in addition to traditional generalized information about their age, occupation, and residence. They allow getting insights on the frequency of vehicle usage with exact purpose and timing for each case. This way, you can distinguish between high-risk customers and low-risk customers and serve them accordingly.
2. Cost-effectiveness
With the Internet of Things, insurance companies can significantly reduce their losses. This refers to better claims processing and an ability to prevent potential unnecessary expenses in advance. Moreover, the application of IoT telemetry will make your business cost-effective for clients, suggesting customized discounts for drivers and corporate clients.
3. Better interaction with clients
IoT insurance creates the background for establishing stronger customer relationships, meaning improving personal and commercial interactions with your company. The technology introduction contributes to addressing the needs of value-conscious customers by offering a more customized and accurate service package. All this can transform the common perception of insurance services as the “necessary evil” and bring in more worth in your relationship with clients.
4. Empowered branding
The enhancements provided by IoT insurance have an indirect impact on the stronger corporate brand. In particular, it improves the overall service quality and provides the ground for decisions that can help you outperform competitors. This is a true competitive advantage these days due to the strong positions of conservative approaches in the industry.
5. Access to innovative opportunities
With IoT, insurance companies get a diversified data collection tool that is applicable for making enhanced analysis with numerous factors — corporate context, client behavior, location, physical condition, health state, etc. All this information can generate useful insights and become the basis for innovative and accurate decisions.
How and Where to Get IoT Technology in Insurance for Your Benefit
Even though the exact peculiarities of the Internet of Things insurance industry are promising, you should understand how to use it correctly. For taking full advantage of IoT opportunities in insurance, here are the main things to possess:
- Sufficient data sources. For proper analysis, your company needs to collect as much raw information as possible. Make sure it’s valid and is relevant for generating insights.
- Presence of security controls. Since the ability to manage privacy concerns is critical for IoT insurance, it’s important to elaborate on the data protection in advance. You’ll probably struggle with a traditional vision for insurance organizations on the information closure, but that’s needed.
- Establishing trust with your vendor. One of the main obstacles to effective IoT application in insurance is an inability to find the needed tech talents who can introduce this technology in the industry professionally. Therefore, it’s common to mistrust the innovation itself. That’s why it’s highly recommended to find an experienced and reliable tech partner.
The typical software elements for insurance and IoT solutions are:
- Risk control tools. The set of technologies includes analytics for checking price insights and linking prices with customer habits. The expected result is lower severity and frequency of claims.
- Expenses management. Here, smart devices can make real-time observations and provide timely management of money-related issues. Among the concrete areas checked, there are fraud detection, processes optimization, and command center introduction.
- New value proposition. In this dimension, insurance and IoT are linked to reaching greater customer retention. This is made through a diversified set of tools that include a notification center, maintenance alerts, and accurate proposals.
If you’re searching for a software development vendor that works with IoT insurance, refer to Intellectsoft! We’re a tech company with a vast portfolio of successful projects delivered to clients all over the world.
Among our custom insurance software development services, there is an option to request IoT technology for insurance. In this solution, we offer a set of customized smart devices for your insurance company to address your business needs in the most accurate way.
Talk to our experts and get the details on the service. Invest in the Internet of Things insurance innovation in a smart way with us!
