Historically, the insurance industry has always had a reputation of being slow to change, but in recent times, there has been significant disruption and innovation. In the early stage of IoT adoption, insurers primarily used IoT to boost interactions with customers and expedite claims and underwriting. Today, insurers are doubling down, and utilizing IoT on a wider level such as incorporating water leak, gas, and temperature sensors within residential, institutional, and commercial buildings. What is a better way of expediting a claim, than by preventing it in the first place? Having the ability to monitor these key metrics and be alerted to any deviation from the norm, can aid in the prevention of building and life loss.
Within other sectors as well, such as the automobile industry, insurers often categorize risk by age and creditworthiness. With IoT sensors, they can now better determine risk more precisely based on driving behavior such as speed, time of day mostly used, etc. The implementation of IoT into the insurance model does not only benefit insurers but also clients that have shown exemplary behavior, which can result in lower premiums.
Lastly, one of the biggest issues within the insurance sector is fraud. According to the Coalition Against Insurance Fraud, fraudulent claims steal $80 billion USD annually across all lines of the insurance business. Plots of insurance fraud cases usually include inflating a genuine claim and staging accidents. By incorporating IoT, insurers can lower the risk of fraud by refuting claims with the data being gathered by their sensors as evidence.
As IoT continues to evolve, data collected will help insurers better understand their customers on a deeper level and create products and services that will help tackle specific issues their customers are facing while driving strategic initiatives.