We’ve all seen it or experienced it: an unexpected hospitalization, a break-in while we’re on vacation, or a car accident on the way home from work. Misfortune is bound to cross our paths at some point, which is why we go through the trouble of insuring our assets. Try as they might, insurance firms haven’t truly been able to minimize risk facing customers—but that is changing with the emergence of the Internet of Things (IoT).
The Internet of Things—connected sensors and devices that gather and share data—creates unprecedented potential for organizations in all industries. Insurance is no exception. From your fridge to your car to your wrist, sensors connect more and more of the products and devices we use at home, at work or on-the-go. In fact, there are 6.4 billion connected “things” in use today.
All these connected “things” generate vast amounts of data that hold huge potential for insurance providers and their customers. Harnessing this anonymous data provides real-time insight as well as opportunities to identify new macro trends and patterns over time. That translates into opportunities to reduce the risk of unexpected machine failure, monitor and manage an individual’s heath more closely, reward good driving behaviors, and more. Insights derived from this data can also lead to lower insurance rates for low-risk assets or discounts for safe drivers.
The data from connected devices and sensors can also warn of problems—before they happen. By capturing and analyzing data from millions of connected things in real time, and comparing that data to historical trends, it’s possible to predict more precisely when a given event might happen, so that it can be prevented or mitigated.
These kinds of IoT-driven innovations are reshaping how insurers do business, enabling carriers to more effectively assess, price and limit risks and develop new products. In addition, they are extending benefits to customers, including shorter response times, more efficient claims processes and personalized insurance policies.
An innovative use case: Employers are using IoT to protect employees
In commercial applications, IoT data from smart, connected products is already improving operational performance, enhancing customer experiences and expanding products and services beyond traditional boundaries. For example, IoT is helping employers prevent injuries and workplace accidents by monitoring employee movements in high-risk areas to warn of potential dangers.
Companies are also using wearable technologies to help employees take control of their health by documenting their sleep patterns, calorie burn and activity level, which leads to lower rates of absenteeism and higher healthcare cost-savings.
Sharing the wealth: Passing the benefits of IoT along to consumers
IoT is helping insurers not only offer tailored products and services. It’s also enabling them to reduce risks for end-customers. From devices that enhance home security against natural disasters to sensors that monitor water and energy consumption, there are a variety of connected devices in our homes. Smart home sensors can detect moisture in a wall from pipe leakage and alert homeowners to issues prior to a pipe burst, saving the insurer from a large claim and the homeowner from property damage and the inconvenience of a major repair.
In a similar fashion, IoT devices are making usage-based insurance (UBI) possible for car owners—offering discounts or other rewards for responsible behavior, such as safer driving or consistent maintenance. It’s estimated that by 2020, over 50 million U.S. drivers will try usage-based insurance. Beyond enabling personalized discounts and rewards, insights coming in real time from connected vehicles can even make the claims process speedier and more efficient.
In action: Usage-based insurance
Aviva, a leading insurance company based in London, aimed to offer better insurance rates and personalized service for their 43 million customers worldwide. Aviva developed a mobile app that works with a phone’s built-in GPS technology and sensors and the Azure platform to capture driving data. Drivers that used the free app were given a personalized quote after 200 recorded miles.
Bringing IoT to life with advanced analytics and cloud computing
As connected sensors and devices proliferate in our cars, homes, and everywhere in between, they generate enormous and growing volumes of data. But for that raw IoT data to be valuable, it needs to be transformed into usable insight.
Cloud-based IoT and analytics solutions, like Azure IoT Suite and Cortana Intelligence Suite, make it possible to gain insights in a scalable, flexible and cost-effective way. As an industry leader in IoT, advanced analytics, and cloud, Microsoft brings together the technologies required to derive business value from IoT. These technologies are available in finished solutions, enabling insurers to get IoT projects up and running quickly and start seeing value.
At Microsoft, we’re seeing first-hand how the use of IoT and analytics to identify, understand and reduce risk is revolutionizing the insurance industry. With these technologies, insurance providers have the opportunity to develop more personalized offerings, serve customers more effectively and reduce risk in entirely new ways. And this is just the start—we anticipate even greater innovation yet to come. Stay tuned.
Read more on innovation in insurance by Tony Jacob.
Check out Microsoft solutions like Cortana Intelligence Suite, Azure IoT Suite and Azure Machine Learning, which make it possible to uncover breakthrough insights and shift from analyzing the past to predicting the future.
To learn more about how IoT can transform your business, visit www.InternetofYourThings.com.