Internet of Things – a game changer in Insurance industry!

The “Internet of things” (IoT) is becoming an increasingly growing topic in industry forums and boardrooms. It’s a concept that not only has the potential to impact how business interact with consumer but also how consumer interacts with business and business to business. Gartner research reveals the Internet of Things (IoT) as one of the most active areas for innovation in many industries. IoT is a game changer for insurers that embrace and position itself to leverage it. These leaders stand to realize concrete business benefits including increased operating efficiencies, improved customer experience, better risk management, more profitable underwriting / pricing, fast / more accurate claims payout, and accelerated innovation in the traditional insurance transactions.   There are challenges ahead, but the payoff is expected to be substantial for both the insurers and their customers.

The Internet is evolving to connect people to physical things and also physical things to other physical things … all in real time. It’s becoming the Internet of Things (IoT): Billions of interconnected smart devices measuring, moving, and acting upon all the bits of data that make up daily life. As per IDC, 41% of decision makers surveyed say their organizations plan to collect and process IoT-related data close to the point of creation. By 2020, Internet of Things spending will rise to $3 trillion and nearly 30 billion devices. McKinsey estimates that the Internet of Things has a total potential economic impact of $3.9 trillion to $11.1 trillion per year in 2025.

Earlier this year, IBM made an announcement to invest $3B in Internet of Things over the next four years to help clients and ecosystem partners build IoT solutions. IBM now offers IOT solution on its Bluemix platform through cloud that can rapidly compose and extend apps that take advantage of data and analytics from your connected devices and sensors. IBM Internet of Things Foundation is a fully managed, cloud-hosted service that makes it simple to derive value from Internet of Things (IoT) devices.

In June, Microsoft struck a deal with American Family Insurance, the eighth-largest home insurer in the US, in which both companies will fund startups that want to put sensors into smart homes and smart cars for the purposes of “proactive protection. An insurance company would gladly subsidize the costs of installing yet another sensor in your house – as long as it can automatically alert the fire department or make front porch lights flash in case your smoke detector goes off.

Goldman Sach’s research report on the Internet of Things showed their focus on five key verticals where the IoT will be tested first: Connected Wearable Devices, Connected Cars, Connected Homes, Connected Cities, and the Industrial Internet.

Gartner - IOT

The cost of sensors, processing power, and bandwidth to connect devices has dropped low enough to spur widespread deployment. Innovative products like fitness trackers and Google’s Nest thermostats are demonstrating the potential for both consumers and enterprises. Connected Homes are perhaps the clearest next proving ground for the IoT, combining both the potential to spawn new lines of products and services in areas such as security cameras and kitchen appliances, and the chance to reduce energy use and costs through smart thermostats and HVAC systems.

Gartner Says By 2020, a Quarter Billion Connected Vehicles Will Enable New In-Vehicle Services and Automated Driving Capabilities. During the next five years, the proportion of new vehicles equipped with this capability will increase dramatically, making connected cars a major element of the Internet of Things (IoT). European officials have considered requiring all cars entering the European market to feature a built-in mechanism that allows the police to stop vehicles remotely. As both cars and roads get “smart,” they promise nearly perfect, real-time law enforcement. Instead of waiting for drivers to break the law, authorities can simply prevent the crime. In April, Apple patented technology that deploys sensors inside the smartphone to analyse if the car is moving and if the person using the phone is driving; if both conditions are met, it simply blocks the phone’s texting feature. Intel and Ford are working on Project Mobil – a face recognition system that, should it fail to recognise the face of the driver, would not only prevent the car being started but also send the picture to the car’s owner (bad news for teenagers). In the near future, Google will be the middleman standing between you and your fridge, you and your car, you and your rubbish bin, allowing the National Security Agency to satisfy its data addiction in bulk and via a single window.

In a survey of over 450 business and IT leaders, Gartner discovered that 40 percent were looking for the IoT to boost sales and cut costs for their organizations within three years. Less than a quarter of those polled had IoT leadership in place, in the form of either a single business units or multiple groups taking up the cause. Gartner’s data reveals that the IoT is very immature, and many organizations have only just started experimenting with it by adding IoT-enabled gear to their production environments. As per Gartner Research, successful IoT initiatives don’t have to fall squarely on the shoulders of a CIO or other top executive but it will be LOB led initiative from several business units.

Ref:

  1. “The Internet of Things: Mapping the Value Beyond the Hype”, McKinsey Global Institute, June 2015
  2. “IDC MaturityScape Benchmark: Enterprise Mobility in the United States”, IDC, May 2015
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