Imagine while driving home in a telematics-enabled electric car, you, as a consumer of insurance, speak to the vehicle informatics system to disarm the home burglar alarm, open the home’s garage door, turn on the lights, lower the shades, unlock the doors and adjust the thermostat to make the home comfortable for the evening. Imagine as well that the car docks in the homeowner’s garage for recharging and communicates with the home that it has arrived.
When entering the home, you use voice commands on Alexa to shut the garage door, get the news, check on the status of a claim and listen to music. While cooking, the refrigerator keeps tracks of household meal needs. And if dinner gets burned during meal preparation, the homeowner once again uses voice commands to tell the smoke alarms to ignore the kitchen smoke.
During the meal, the doorbell rings, and the picture and voice of a person at the door appears on the insured’s cellphone for response. Not wanting to speak to the person at dinnertime, the homeowner sends the caller away. After dinner, you browse the internet on a smart TV, order a movie, get sleepy and head off to bed.
At bedtime, you use voice commands to turn off the TV and lights, engage the alarm, check on the thermostat temperature, and view the status of home systems such as heating or cooling and the solar panel battery backup for optimal functioning. Before dozing off, you check the mobile for the total steps accrued on your wearable during the day.
These “futuristic” scenarios are here today in the form of Internet of Things (IoT) that control many types of connected devices available in the marketplace. Right now, data from sensors and internet enabled devices is empowering an insured person's control over their smart home, vehicle and personal health. The value and benefit to the insured is easily seen, but imagine the value of the data from all these interactions to insurance companies to better understand and service the customer, as well as to better assess insured risk.
Several insurance companies are leveraging IoT devices and data including:
- Amazon Echo, Google Nest use for billing, claims status, quoting, finding an agent and risk messaging
- Remote Access Security to provide specialized home protection services, including access to property protection and, 24/7 professional monitoring against intrusion, fire, smoke, flood, and carbon monoxide
- Telematics offerings that provide auto discounts and driver risk messaging
- Wearable Devices to provide insureds incentives to stay fit as part of their life insurance progra
- Drones for property damage assessment and pricing
- Connected Toothbrushes for dental health
- Connected Doorbells for security discounts
While many insurers are offering more sophisticated and mature vehicle IoT through telematics programs, the home and personal health programs continue to develop. Once these insurance programs advance and mature, insurance companies will realize significant value from the data as it becomes part of their total data fabric.
Granted, the profitability of IoT has yet to been fully proven out—and there are privacy concerns and risks that will need to be addressed—but the future will offer a complete data continuum of the insured's behavior and risks that has great business and analytic potential for carriers.
IoT enables insurers to:
- Further refine customer understanding and segmentation with lifestyle information coming out of the connected vehicle, home and personal fitness wearables
- Increase customer contact opportunities to build better relationships that drive higher Net Promoter Scores, levels of satisfaction and lifetime value
- Better risk exposure accuracy with streaming IoT data for improvements to the bottom line
- Offer new customer services through better customer insight on chatbots
- Provide real-time warnings and risk messaging to homeowners when connected home systems detect water leakage from a hot water tank, insufficient temperatures during winter cold snaps, or high carbon monoxide levels
- Provide faster claims handling with drones in catastrophes reducing costs, losses and lawsuits from insureds due to slow claims handling
- Provide real world loss detail for claim investigation and resolution
- Reduce early mortality losses for life insurance policies through connected fitness devices
With 23.14 billion devices enabled now and predictions of as many as 74.4 billion devices by 2025 (source: Statistia.com), the digital change and the value of new data will significantly change the insurance industry.
The key is making all the IoT and traditional insurance data available on a cohesive and flexible analytic platform that allows one query to pull results from diverse data sets. Fortunately, data and analytic systems such as Hadoop, discovery analytics and traditional data warehousing in the cloud and in insurance data centers offer a unified analytic architecture to enable analytic insights from a diverse data fabric including varied data structures.
Couple the unified analytic architecture with advances in artificial intelligence including machine learning, the insurance industry will be able to derive valuable data insight never seen before, more advanced predictive / prescriptive capability of insured service and insurance needs as well as potential loss risks, and automation of rich insured messaging, claims handling, and differentiated services.
As was seen with automobile telematics, a “get there first” mentality enables carriers to potentially avoid adverse selection, increase customer satisfaction, and increase its competitiveness in the marketplace. Will your company be first in line to reap the evolving benefits of IoT?
Dig deeper! Learn about how Teradata is helping some of the largest insurance companies in the world compete on analytics, and IoT.