“The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it”.
It’s reasonably likely that you’ve heard of the phrase, Internet of Things (IoT). It’s a concept that’s been steadily growing into mainstream consciousness over recent years. And a concept that’s been lurking in the background of the internet’s development, almost from the moment the internet came into being.
IoT offers the power to connect devices through Wi-Fi, 4G or Bluetooth, transmitting data between each that can be used to trigger an action or service. Born out of the evolution of mobile internet – the smart phone leading the way towards the smart home, smart car and, ultimately the smart society.
And, as you’ll know just from looking around the world in which we live, this is no longer just a fanciful idea from an old episode of Tomorrow’s World (and how quaint that now seems). IoT is a reality of our everyday lives already.
We have the ability to control our energy usage, lighting, appliances and home entertainment via our mobile phones. To transmit data from watches concerning our health and fitness. Not to mention the revolutionary things happening in the automotive industry: smart technology that can automatically call for roadside assistance or send diagnostics directly to the garage. And the inevitable march towards self-driving car and trucks.
Impact on Insurance
As IoT impacts on the world, it’s going to deliver significant impacts, challenges and opportunities to the insurance industry.
If there’s one industry that relies heavily on data, then it’s insurance. Of course, the traditional model for analysis has been in the study of historical data as a means of predicting future outcomes.
IoT has the power to change this model.
There’s the potential for a tidal wave of new data (structured and unstructured) from an exponential number of connected sources, delivered in real-time. Information on clients that offers profiling potential never before imagined.
What are the possibilities?
- Transmitted data indicating health levels – as we see from FitBit devices and similar
- Data from the home that might indicate potential for damage, or theft – smart alarm systems?
- Driving data that acts an indicator of safe driving, or otherwise
- Environmental sensors in properties that can offer real-time and changeable risk monitoring.
The accumulation of data such as this presents some challenges, of course. How, for instance, can such an unprecedented flow be managed and analysed? It would require the incorporation of enterprise-level software, and greater adoption of AI-driven technology with the ability to spot patterns and assess risk at a granular level.
Those willing to grasp this technological nettle can reap a competitive edge.
Insurance has always been attached to our working lives and general lifestyles. IoT offers the opportunity for greater integration. The examples cited above, and there will be plenty of similar examples, offers the chance to delve into the minutiae of data as never before, presenting laser-guided accuracy in risk assessment, tailoring policies to individual circumstances, and delivering new business models improved loss ratios.
Predictions about just how ubiquitous IoT will become are varied in scale; with some estimations suggesting more than 25 billion connected devices in the world by 2020. Whatever the actual number, the overwhelming consensus is that the internet of things will permeate deep into our society and everyday lives. So much so, perhaps, that the phrase itself (internet of things) will grow obsolete, a technology woven deep into the fabric of our lives.