Smart Devices: How IoT is Changing the Insurance Industry
By Shayla Price
Smart devices make our lives safer. Insurers understand that smart devices also mean smarter insurance assessments. And the results are changing the industry.
The Internet of Things (IoT)—physical devices that collect user information from devices—send real-time data to insurers. IoT allows insurers to track client behavior.
Many insurance companies have taken advantage of IoT. Insurers have created usage-based insurance (UBI) packages that offer incentives to clients whose devices reflect a healthy or safe lifestyle.
According to Business Insider, “17 million people have tried UBI auto insurance.”
The spread of UBI is only limited by the development of technology. Here are three insurance sectors leading the way to harness the power of IoT:
Automobile Insurers
Auto insurers lead the pack when it comes to UBI. An independent LexisNexis study found that while “UBI currently accounts for just two percent of US personal lines auto insurance policies, [it’s] projected to capture 20 to 30 percent of this market.”
Moreover, Business Insider estimates that by 2020 over 50 million US drivers will have tried UBI insurance. Industry giants like Progressive, Allstate, and State Farm are using this technology.
They are providing drivers with On Board Diagnostic (OBD-II) dongles to collect driving data. An estimated 155 million cars on the road in North America are already compatible with this technology.
How can auto insurers take advantage of this growing trend?
Acquire smart dongles. They are the key to acquiring driving data. The dongles easily plug into ports under a vehicle’s steering wheel.
Adopt a system for analyzing real time driving data. Several software solutions are readily available for insurers, including from reputable tech companies like Cisco and Panasonic.
The IoT specialists at Allerin cite their cost-effectiveness, insisting onsite data “can improve [the] ability to make decisions quickly by doing the analyzing where the data is created.”
IoT is the new frontier for automobile insurers to provide exceptional service.
Home Insurers
The rise of the smart home is here. As homes become increasingly connected, so do opportunities for collecting client data.
This is good news for home insurers like American Family Insurance that teamed up with home security company Ring. The insurer offers discounts for clients who buy a doorbell security device and reimburses device owners their deductible if their homes are burglarized.
But security isn’t the only arena where smart home devices excel. Connected devices can also provide data to insurance companies regarding risk. This information equips insurers to make better assessments.
Some skeptics question whether clients are willing to give more personal information to insurers. A study by Accenture notes that 78% of clients would share this personal information if offered benefits, like lower premiums and quicker claim settlements.
UBI is quickly becoming an asset for home insurers.
Healthcare Insurers
IoT isn’t just for vehicles and homes. Connected devices like Fitbit, Jawbone and Vessyl now monitor our health. These companies use scientific data to help people optimize their well-being. Healthcare insurers thrive on healthy clients by avoiding payouts.
Employers benefit from corporate health insurance plans. According to Forbes, “Fitbit’s sales to employers are now one of the fastest growing parts of its business.”
The Forbes article also notes that Cigna teamed up with BodyMedia to distribute armband monitors to thousands of employees. The program resulted in improved health for employees.
IoT is a win-win situation for insurers and employees.
Insurance and IoT
IoT provides an unprecedented opportunity for insurance companies. It brings their assessments to a new level.
Companies that implement these programs will have access to real data. IoT is changing the insurance industry for the better—one device at a time.
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Shayla Price creates and promotes content. She lives at the intersection of digital marketing, technology, and social responsibility. Shayla contributes to Entrepreneur and Huffington Post. Connect with her on Twitter: @shaylaprice.
