Interest around what IoT can do for the insurance industry may be high but this is not reflective in actual deployments of the technology. Novarica says this shouldn't stop insurers from experimenting on the technology"Insurers have a unique position relative to IoT opportunities compared to other types of businesses, because the same data used to deliver services also allows insurers to improve the efficiency and efficacy of the insurance product itself," said Chuck Ruzicka, Vice President of Research & Consulting and lead author of the report.
While deployment of IoT initiatives by insurers is low, Novarica says insurers are "highly" interested in operationalizing IoT products. Despite the inherent challenges experimenting with IoT poses - the need for and cost associated with implementing sophisticated big data and AI capabilities in particular - insurers will likely need to address the Internet of Things in the coming years to keep pace with their competitors. Insurers can leverage insights from IoT devices for improved risk assessment, underwriting, and fraud detection, among other benefits, as well as provide new types of value to policyholders, including bundled services and risk monitoring/mitigation services.
"Bundled services and other kinds of value-adds are a natural fit with the rest of an insurer's business plan, because insurers already want detailed, personalized information to improve their risk rating, underwriting, fraud detection, and claims administration. In turn, offering services to the policyholder encourages them to share more information with the insurer," Ruzicka concluded.