[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2020\/12\/22\/iot-in-insurance-radical-change-powerful-potential\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2020\/12\/22\/iot-in-insurance-radical-change-powerful-potential\/","headline":"IoT in insurance: Radical change, powerful potential","name":"IoT in insurance: Radical change, powerful potential","description":"IoT in insurance can add customer value, improve executive strategies, and move companies from passive risk-taking to active risk management.","datePublished":"2020-12-22","dateModified":"2025-02-05","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/james-eardley\/#Person","name":"James Eardley","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/james-eardley\/","identifier":161,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/973f2a97f5915a88f34d646ae26d3b7428357df8e651eff46e7dc791d11ec0ba?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/973f2a97f5915a88f34d646ae26d3b7428357df8e651eff46e7dc791d11ec0ba?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Commerce","logo":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","width":172,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2020\/12\/FCEE090_InsuranceIoT_HB.jpg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2020\/12\/FCEE090_InsuranceIoT_HB.jpg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2020\/12\/22\/iot-in-insurance-radical-change-powerful-potential\/","about":[{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/commerce-general\/","name":"Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Commerce","http:\/\/www.wikidata.org\/entity\/Q26643"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/customer-experience\/","name":"Customer Experience","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Customer_experience","http:\/\/www.wikidata.org\/entity\/Q984142"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/customer-experience\/customer-experience-general\/","name":"Customer Experience","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Customer_experience","http:\/\/www.wikidata.org\/entity\/Q984142"]},"Industries","Insurance",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/intelligent-enterprise\/","name":"Intelligent Enterprise","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Intelligent_enterprise","http:\/\/www.wikidata.org\/entity\/Q6044119"]}],"wordCount":852,"keywords":["Digital Insurance","Future of Insurance","Insurance Industry","IoT | Internet of Things"],"articleBody":"IoT in insurance is helping drive some of the most massive change in the history of the industry.\u00a0\u00a0Propelled by IoT and AI,\u00a0the insurance industry is\u00a0changing its approach to risk. It\u2019s evolving from\u00a0a backward-looking\u00a0focus to\u00a0managing risk to a forward-looking stance of minimizing it.\u00a0\u00a0This shift\u00a0promises tremendous benefits for both the customer and insurers. But getting there isn\u2019t easy.\u00a0IoT in insurance: The big shake upAs\u00a0IoT has made its way into everyday life, embedded in our home and work devices, it opens up new opportunities for the insurance industry.\u00a0Insurers can use IoT technologies to assess risks more accurately and shake off old habits.\u00a0\u00a0But\u00a0insurers have been slow to take advantage of IoT opportunities. It\u2019s a tremendous\u00a0mind shift\u00a0for an old industry that\u2019s been in reactive mode for so long.\u00a0What do experts have to say about IoT in insurance?Focus on adding customer valueIoT adoption is slowThis is about more than technology; it\u2019s psychological too Industry Experts on IoT in InsuranceA panel of insurance industry thought leaders convened to discuss IoT opportunities and challenges. You can watch a replay HERE.Heart of the matter: Adding customer valueA powerful example of IoT in insurance is providers offering customers proactive advice on how to manage their health. This approach clearly is beneficial to the customers as well as the insurers.\u00a0Lukas Fischer of the Institute of Insurance Economics at University of St. Gallen suggests that insurance companies should think in terms of prevention.\u00a0In the health example\u00a0above,\u00a0this means\u00a0minimizing negative health events by providing useful data to customers.\u00a0\u00a0With the advent of IoT-enabled devices such as wearable health trackers, customers are better able to manage their own health-related activities. At the same time, insurers gain visibility into what customers are doing \u2013 and\u00a0have\u00a0analytics that drive better business decisions.\u00a0At the heart of this change is an increased focus on adding value to the customer. As Fischer explains, beginning with this orientation will help insurance companies\u00a0find\u00a0new opportunities that can be monetized, and integrated into the core business,\u00a0at a later\u00a0time.\u00a0\u00a0      Bad reputation: Changing the perception of insurance                The perception of the insurance industry isn't pretty. How does the industry change consumers' view of it as a necessary evil?      IoT adoption in insurance: Tepid at bestBear in mind, however, that this is a vastly different mindset for insurers, and many are likely to struggle with the change.\u00a0Sven Roehl, the founder of Cookhouse Labs \u2013 a Toronto-based collaborative hub for insurance thought leaders \u2013 pointed to a recent\u00a0Lexis Nexis study\u00a0as evidence that insurers are finding the transition challenging.\u00a0\u00a0The study found that although\u00a0the majority of\u00a0insurance industry leaders \u2013 70% \u2013 agreed that IoT data is of great importance to their overall strategy, only 20% are\u00a0actually collecting\u00a0the data. Even more remarkable, only 5% of the companies surveyed are using such data.\u00a0In other words, even though insurance companies \u2013 and, just as importantly, their customers \u2013 see the benefit of integrating IoT data into the insurance equation, it\u2019s still not happening on a broad scale.\u00a0\u00a0Once reason is that insurance companies traditionally view risk as something to be managed by looking at past data \u2013 in other words, looking in the rear-view mirror to try and predict what\u2019s coming ahead.\u00a0\u00a0But the real question is, how can they use real-time data \u2013 the type of data that IoT-enabled devices provide \u2013 to do more effective risk modeling?\u00a0      Smart home AI for digital dummies                Smart home AI presents tremendous opportunities for the utilities industry to capitalize on simplification of connectivity.      Passive risk taking to active risk management\u00a0As Peter Maas \u2013 Professor of Management at the University of St. Gallen \u2013 observes, it\u2019s not just a technology question. There\u2019s also a psychological component at play. Even though insurance companies inherently dislike claims, claims are at the heart of the business. One reason for this is that claims are measurable, whereas prevention \u2013tallying up negative events that didn’t happen \u2013 is much more difficult. As a result, leaders of insurance companies have a hard time focusing on prevention, even though doing so would add value to customers.\u00a0In the end, Roehl points out, the shift from passive risk taking to active risk management \u2013 enabled by the advance of technologies like IoT \u2013 is one of the biggest changes ever in the insurance industry. \u00a0This shift also changes the relationship between the insurer and the insured, since there is now greater transparency about what\u2019s driving the rates and what’s actually covered. It\u2019s quite a change from customers scratching their heads about the fine print in their policies.\u00a0For the insurance companies, there are broader benefits as well. The changing nature of their relationship with customers means there\u2019s a massive opportunity to evolve how the industry is viewed by society as whole. It\u2019s all about using technology and data in ways that benefit the customer over the course of their lives.\u00a0  Insurtechs. Omnichannel customers. Can you keep up? Get the insurance digital game plan HERE."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2020","item":"https:\/\/www.the-future-of-commerce.com\/2020\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"12","item":"https:\/\/www.the-future-of-commerce.com\/2020\/\/12\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"22","item":"https:\/\/www.the-future-of-commerce.com\/2020\/\/12\/\/22\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"IoT in insurance: Radical change, powerful potential","item":"https:\/\/www.the-future-of-commerce.com\/2020\/12\/22\/iot-in-insurance-radical-change-powerful-potential\/#breadcrumbitem"}]}]