An Insurer’s Guide to the “Internet of Things”

There’s a new buzz word that’s starting to make itself felt. That buzzword is “The Internet of Things” but what does it mean? And more importantly what impact is the “Internet of Things” going to have on insurance.

The Internet of Things

The Internet of Things is a wide term which really covers the idea that you might want to (and be able to) connect non-computing devices to the internet. For example; you might want to be able to put your dinner in the oven before you leave home but you might need to be able to control when the dinner starts cooking based on when your last meeting ends.

The internet of things would allow you to put a chip (computer not potato) in the oven. This would connect it to the internet. You could then use your mobile phone to let this chip know that your meeting was over and it was time to start cooking the coq au vin.

In essence the internet of things is anything at all which might be connected to the internet. It will lead to “smart devices” in a similar way that the last decade led to “smart phones”.

How Might This Impact Insurers?

Home Appliances

Imagine that you could connect someone’s fridge to the internet and then monitor the contents. If you were a health insurer; you could then offer the owner benefits if they kept their fridge stocked with healthy fruit and vegetables and perhaps penalties if their fridge overflows with lard and burgers.


Carpets could be programmed to detect if an elderly relative falls on the floor or if a burglar has stepped into your hallway. Insurers could take this data and reduce senior-care insurance costs or home insurance premiums.

Home Management

Thermostats, window controls, etc. could all be plugged into the internet of things. Careful control over the humidity or moisture content in the air of a house can prevent dry rot and other issues. Again premiums could be tweaked for householders that agreed to meet and abide by their insurers standards.

Physical Fitness

Once again, health insurers should be salivating at the prospect of exercise equipment that reports on the user’s commitment. Failing to do the right amount of work on the treadmill or exercise bike in a certain period could have significant impacts on a consumer’s premiums.

There are dozens of other potential uses for the internet of things. What the real implication for insurers is is simple. It’s the idea that there will be much more data available for insurers to access risk on. This should lead to ever more personalized products and better value (and profitability) from policies as a whole.

Insurers Internet of Things

One comment

  1. Another factor to this as well is that its predicted that the number of criminal cases involving the internet of things will increase massively. This potentially could impact insurance in an unprecedented way.

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