The Internet of Things (IoT) is mostly viewed as a futuristic concept and is recently being adopted in the insurance sector. Early adopters of IoT have found a substantial value by illustrating how data from various devices including in-home and automotive sensors, wearable technology, drones, GPS, mobile, networked appliances and other multiple sources can help improve business, enhance risk assessment and proactively engage policyholders in loss prevention. IoT offers the transformative potential to the insurance industry.
IoT is the network of interrelated computing systems, sensors or other objects that have unique identifiers and can communicate with other devices on the network, which are capable of transmitting data. The most impactful data sources from the IoT for insurers are likely to include
• wearable or personal technology
• sensors or objects
• location based sensors
• geographic information systems
The IoT impact within the insurance industry is coming entirely into focus. Better use of IoT and sensor data means better opportunity for insurers. Much customer data was unavailable previously, and the information insurers could access was often subjective and inaccurate. Today IoT greatly expands the landscape of accessible data, bringing up new possibilities in many functions. Coupled with advanced analytics capability data sources have set the foundation for new business models.
The availability of different data types increases precision in assessing risk, pricing policies and estimating necessary reserves. Underwriters can recommend real-time policy term modification through constant monitoring. IoT is likely to drive the revolution in claims oriented more towards active loss prevention. Life insurers can streamline the conventional intrusive and lengthy underwriting process, as sensor data provides the answer from old paper-based application forms.
The use of IoT can potentially redefine the role of the insurance sector from one that compensates for the loss to one that prevents potential losses of the policyholder.
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