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09 October 2016

How the Internet of Things Is Expected to Transform the Insurance Industry

source:  CB Insights
How IoT is expected to transform the insurance industry
by Phillip Tracyindustrialiot5g.com, 30 September 2016

Insurance companies looking to cut costs, improve business practices and better assess clients’ risk levels, will increasingly invest in the internet of things, according to Business Insider.

Some auto and health insurers are already offering a new type of insurance, usage-based insurance (UBI), that uses IoT devices to track clients’ activity and offer discounts or rewards for healthy and safe behavior. Business Insider expects 17 million people will have tried UBI auto insurance by the end of this year.

In the publication’s Insurance and the IoT Report, it looks at various markets, including auto, health and property, and discussed the way new IoT-driven trends are changing insurance models.

Here are some key points from the report:
  • Auto insurers are the leading adopters of UBI insurance models. By 2020, over 50 million US drivers will have tried UBI insurance, according to our estimates.
  • Healthcare insurers are giving customers free fitness trackers and offering lower premiums or other benefits for meeting daily exercise goals.
  • The IoT is also helping insurers reduce risk and mitigate costs in other ways.
          - Home insurance companies are incentivizing customers to install connected devices that warn of potential danger to properties.
         - IoT-based analytics can be used to predict future events, such as major weather patterns. This can help insurers better price policies and prepare customers for upcoming incidents, which should help reduce damages.
        - Property insurance companies are increasingly using drones to assess damages after an incident has occurred. Consulting firm Cognizant estimates that drones will make insurance adjusters’ work flow 40%-50% more efficient.

We have all read the estimates putting the number of active IoT-enabled devices at the tens of billions by 2020. What may be more of a surprise, is that insurance companies have already begun to implement new pricing models around the internet of things in order to price risk, lower prices and rollout new products.

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