How the Internet of Things is transforming insurance

Customer experience is the new industry standard – and the competitive edge – for insurance companies. They must cater to tech-savvy, mobile consumers who expect superior personalized service.
The Internet of Things (IoT) offers practical and simple solutions that can help insurers deliver customized personal service. And it does so by dramatically enhancing the usefulness of something that industry professionals already have in spades.

Using Data to Stay Ahead of Customer Needs

Insurers already collect vast amounts of customer data, from driving habits to medical history to frequency of routine home maintenance. Sensor technology can marry historical customer data with real-time insights into customer behavior — and it’s what the Internet of Things is all about.

Installing data monitors in cars could better calculate insurance premiums, promote safety and tackle reckless driving, according to The National last month. Sensors can record driving patterns such as speed, acceleration, use of indicators and force of braking. The pioneering use of monitors in U.K. police fleets provided a transparent account of drivers’ behavior.

“The use of data loggers was well-publicized as a tool to show that nobody could hide if they were at fault,” British security consultant Robert Rowles said in The National. “And if [sensor technology] was insurance approved, then this could add reductions to insurance for users who drive safely.”

Beyond Immediate Needs
In-vehicle sensors offer a number of uses that go beyond the immediate benefits to the insurance industry:

• Insurers can offer personalized and fair policies to customers based on their driving profile and real risk factor.
• Car manufacturers can include functionality to monitor and alert drivers and fleet managers of the need for repairs.
• In the case of the UAE, where speeding is the leading cause of car accidents, the system would also contribute to overall road safety.The technology can contribute to ongoing education of drivers via alerts about excessive speeding or insufficient braking space.

There are about 1.24 million road deaths annually worldwide, according to the World Health Organization, yet there is a lack of reliable data on why these accidents happen in the leading global markets.

This doesn’t have to be the case. As a society, we can use data to make improvements both on and off the road – from the critical moments immediately after a collision, to seeking medical assistance via insurance providers.

Incentivizing Road Safety

On the heels of the recent Road User Charging conference in Amsterdam, I was looking at the results of the Spitsmijden project, a traffic management experiment in Rotterdam offering incentives for drivers who avoid using the roads at peak times. The innovative project uses on-board diagnostics to monitor activity, and rewards include gas cards and other perks. The initiative uses positive incentives to promote road safety, just like in The National article.

While these are very exciting developments, IoT is more than just car insurers, manufacturers and governments seeking to improve road safety. IoT can benefit all insurance sectors, from property & casualty, to healthcare to life insurance and more.

As we leave data trails of our lives behind us, insurance companies would do well to tap into these data streams to not only improve customer satisfaction, but also to elevate our quality of life with new offerings and services that put our data to good use.

This article is published in collaboration with SAP Community Network. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Robert Cummings is a contributing writer for SAP Community Network.

Image: Internet LAN cables are pictured in this photo illustration taken in Sydney June 23, 2011. REUTERS/Tim Wimborne.