The so-called ‘Internet of Things’ (IoT) data is making it possible to prevent risks faster, more effectively and with more precision, according to respected industry think tank The Geneva Association.
The findings are contained in a report, From Risk Transfer to Risk Prevention – How the Internet of Things is reshaping business models in insurance, a study on the shift from traditional risk transfer to technology-enabled risk mitigation and prevention services in the insurance industry.
The report, authored by Isabelle Flückiger and Matteo Carbone, is based on interviews with over 60 insurers, technology companies, start-ups, global organisations and leading academics across all insurance business lines and geographies.
Offering major benefits to both insurance retail and business customers, the report suggests that the IoT has the potential to mitigate risks and encourage less risky behaviour.
It also highlights early success stories in insurance that demonstrate IoT’s huge potential to promote safer and healthier workplaces and lifestyles, and encourages all stakeholders – insurers, technology companies, regulators – to prioritise understanding insurance IoT and how it can be applied to insurance prevention services.
Jad Ariss, the Geneva Association’s managing director, said: “Our report showcases the tangible impact IoT risk prevention has in improving – and even saving – lives. Although commercial lines are more advanced in rolling out these technologies, there is convincing potential in personal lines as well, with outcomes like fewer auto accidents and damage to people’s homes.”
“The case studies in our report, of insurers who have implemented successful IoT initiatives, should inspire the whole industry. It is customers who will benefit most from this evolution.”
Isabelle Flückiger, the Geneva Association’s director of New Technologies & Data and the lead author of the report, added: “Data provide a critical path to more affordable insurance coverage and to ‘insuring’ previously uninsurable risks through prevention. IoT is a fundamental enabler of this and cannot be ignored by the insurance industry. Insurers should also focus on how to translate the use of IoT-based risk prevention into sustainable business models.”
“The world is now hyperconnected,” said Matteo Carbone, founder and director of the IoT Insurance Observatory and co-author of the report.
“Insurance of the future will use data to enhance customer experiences, impact core insurance processes, create new knowledge and improve sustainability. There are already pioneers in this space, and their stories demonstrate the powerful and increasing role of IoT data in better risk prevention.”
The Geneva Association’s first New Technologies & Data Conference, happening virtually on 1 June and featuring the authors of the report, will explore the trend of IoT risk prevention in insurance and include a number of the insurance companies that participated in the study.