There is an unbelievable explosion of insurance data in the last few years. But, that’s nothing compared to what’s coming next with the Internet of Things (IoT).
It is no surprise that insurers see a massive opportunity in IoT. The world has never been more connected. IoT enabled smart insurance is a win-win proposition for insurers and the insured. The benefits fall into the following categories:
1. The shift to prevention
Digital sensors around the home can provide real-time alerts. By using new sources of data, insurers can alert customers of potential losses even before it occurs. Though it won’t stop every incident, a lot of them can be prevented. This means lower costs to the insurer and a better experience for the home owner at the same time.
It also changes the traditional model of insurance making it more than just a financial safety net. Insurers will want to reduce their losses and prevention is so much better than cure. With smart insurance, a fundamental shift can be seen in the insurance model; from compensating losses to becoming a proactive risk manager.
2. Personalisation is built with data and insights
Personalization of insurance is expected to be the next big trend. Instead of every home located on the same street having the same risk rating, the automated analysis can now provide personalised insight on the customer’s behaviour and risk. As a result, premiums will be adjusted over much shorter periods.
For now, this data is being used by insurers in providing smart insurance. But this is expected to change in the future and customers will then own their data.
3. Insurance is all about settling
For an insurance claim, the longer it takes to settle, the more it costs the insurance company and the more it offends the customer. Well, it is rightly said sooner the better. But this can be possible only if the customers are providing all the requisite information quickly. Similarly, insurance organizations spending less time looking for fraud.
It is expected for the claim process to speed up with IoT enabled smart insurance. With the relevant and instantly available data, there will be a lot less dependency left on the customer collecting and submitting evidence.
Smart insurance automatically means the evidence is from a trusted source, and hence, the payout can be automated. In case there is still any need left for human intervention, the claims handler will require less time to look for the reasons.