Internet of things and its impact on insurances

3 december 2015

Financial Services
Insurance
IoT
Internet of Things

IoT.png

When the internet became widely available in the nineties, consumers needed a computer to go online. Nowadays, a wide range of devices can connect to the internet. Smart phones, smart watches, televisions, thermostats, doorbells, lights and many more things we use every day can be connected to the World Wide Web. Tesla, Uber, Google and many other companies are investing in self-driving cars that can be updated and checked via the internet. The “old” internet is becoming an internet of things.

This internet of things can have a huge impact on the insurance sector. Imagine getting a life insurance. Nowadays your insurance premium is calculated based on some questions you have to answer concerning your age, weight (healthy or unhealthy) and your smoking behaviour. When a customer has a smart watch, the insurer can collect  some details on the lifestyle of the customer. As you possibly will have a lower premium when you can prove that you work out quite a lot, some customers will be willing to share this information.

It can go even further than that: the devices can be able to detect health problems before the person suffering from them even knows he or she has them. For persons with epilepsy for example, there is a smartphone app that can detect when a seizure is going to happen. It does this based on the movements of the person who carries the phone. These kinds of apps do not only make it easier to live with certain diseases, they also are a big source of information for insurers on how bad a certain condition is.

When it comes to car insurances, not only self-driving cars will have an impact, but also telematics are a game changer. They can give the insurance company an insight on the driving behaviour of their clients. How a person brakes, whether he or she respects speeding limits et cetera can not only be used to calculate premiums, but also to change the way the client drives. The insurer gives the driver feedback on his behaviour, giving him a trigger to change the way he drives. This can lead to fewer incidents, which implies less claims for the insurer.

Self-driving cars will have an even bigger impact on the insurance sector. When they cause an accident, who will be held responsible? The owner of the car? The manufacturer? The person who wrote the software? These questions will surely need to be answered.

The whole internet of things creates a lot of opportunities for the insurers. However, there are also a few things they have to keep in mind. Not only can their business model change because of it, they also have to find a good way to work with this technology. The data have to be transferred in a safe way and have to be analyzed. These are things the insurers do not have to do on their own. RealDolmen cannot only help with the implementation of an internet of things, but also with the analysis of your data. We have data analysts who can help setting up models with software we can provide. With SAS we also have our Meteor offering, where we can deliver a data scientist as a service, with SAS in the RealDolmen cloud.

 

EliaMarien_150.jpgThis blog post is the second post in a monthly series about IT in Financial Services.
Written by:  Elia Mariën – Customer Executive Financial Services