The continuous evolution of the Internet of Things (IoT) has the potential to change the nature of daily human activities significantly. At the heart of this revolution are devices that are interconnected through multiple networks. Over 100 billion of these interconnected devices are expected to be in operation in the next decade.
In this article, you will learn about:
- The importance of IoT to Insurance Companies
- Best Ways Insurers Can Increase Profitability Through IoT
All of these devices come in different forms and with different functions. The devices can carry out these functions do to sensors, which are embedded within these devices. Such sensors come in the form of cameras, infrared emitters, motion detectors, and more, which allows these interconnected devices to communicate with each other seamlessly.
Most of these devices are simple to use and easy to install. Each device can collect, process, and transmit real-time data to any desired endpoint. This capability has opened a world of possibilities for businesses, including the insurance industry.
IoT is mostly used in the insurance industry to facilitate the processing of claims. However, more sophisticated IoT solutions are coming up that allows for a greater degree of interaction between assurers and insurers. Insurers are rapidly embracing these new developments as they look to have better control of devices and insurance policies, which leads to the acceleration of processing duration of claims.
The importance of IoT to Insurance Companies
Several digitally interconnected systems are gaining significant ground in the insurance industries. These systems are:
Each of these systems has a different level of complexities and differences. Therefore, for each system, insurance companies must develop a unique strategy to manage individual systems. Additionally, the insurers must keep an eye on the marketability and regulations of each system.
Insurers were slow to get into smart homes as the technology behind the homes was still evolving and not completely standardized. This initial status quo changed as more innovations emerged. Several big technology companies have developed functional smart homes, which has continuously encouraged more insurance companies to delve into the industry.
The simplified usage of smart home devices led to an increase in the number of smart home users, which pushed many insurers to roll out home insurance plans and smart devices for the home. These devices include smart doorbells, home security systems, and many more systems.
Connected healthcare homes
The basic principles of smart homes have also extended into connected healthcare homes or ambient assisted living. Several urban setups have embraced smart devices in improving the general services rendered to senior citizens in care homes and those individuals with disabilities.
This type of arrangement has significantly increased the quality of life of older people and disabled individuals as they are more able to go about their activities with limited assistance from other humans.
More insurers are accepting the role of technology in the delivery of assistance to those who need it. It has also allowed insurers to easily manage nursing homes, care homes, and other special needs housing requirements. Above all, IoT has made the insurance processes more efficient and cost-effective.
Commercial lines refer to business systems that are interconnected through technology. Commercial lines are mainly focused on data collection and operating quality. Within different sections of commercial lines, there exist different value chains that require slightly different devices and standards. Therefore, production, distribution, and more, all have different requirements.
For instance, in production and development, significant levels of cybersecurity are needed. Hence, some form of insurance is essential to provide coverage against cyber-attacks. This need for security has made several insurers to partner with IoT cybersecurity providers.
The auto industry has generally become technologically driven. This change has brought about significant opportunities to numerous industries, including the auto insurance industry. Nowadays, cars are interconnected with remote servers and computers through devices within vehicles and portable devices that a driver may own.
As a result, the integration of technology enables the monitoring of all components of a car. Car owners are able to monitor car temperature, brake condition, tire condition, and general car condition with just a simple tap on a screen.
On the other hand, insurers are increasingly utilizing this technological advancement in cars to provide dynamic auto insurance to assurers. Also, this approach continues to help assurers with good driving habits to drastically reduce the premium rate they pay their insurers as they are given incentives for their cautious lifestyle.
Additionally, insurers are optimizing the use of these devices within cars to ensure profitability by minimizing fraud and manipulation by using approved repair workshops, providing periodic maintenance recommendations, and suggesting technology-based parking options.
Many assurers allow insurers to sell off their driving data to other third-party service providers in return for additional incentives or usable insurance credit.
Best Ways Insurers Can Increase Profitability Through IoT
The main focal point of any business is to ensure profitability. Insurance companies are also no different. Each decision they make is usually geared towards increasing profit through enhanced customer satisfaction. Below are some of the several ways insurers can improve profitability while using IoT.
Identify Where to Use IoT
Insurance companies must identify areas of their business that can attract more clients and increase profitability as a result of the use of IoT. Insurers should be wary of applying this technology in unprofitable sectors of their business. Additionally, insurers should consider all business factors to ensure that the right decisions are made in all instances.
Synergy with Partners
Insurers must select and partner with the right type of IoT service providers to ensure the smooth deployment of their services. These partners may include repair garages, telecommunication providers, utility service providers, and many more. Selecting the right partner also involves selection options that are going to facilitate expansion and growth.
For example, it would be a bad idea for an insurer to partner with an IoT provider that cannot provide more equipment for expansion. As such, insurers are advised to partner with those companies that can quickly assist in the ramp-up of service expansion.
Although insurers may find the right devices and the right IoT service providers, they must ensure that whatever service that is rolled out is sustainable. Insurers must ensure that sufficient profit is driven to assure sustainability.