Over then next five years, the ability to bring internet connection to almost every type of consumer device will be huge implications for the insurance industry. Insurers looking to cut costs, improve business practices, and better assess clients’ risk levels, will increasingly invest in the Internet of Things (IoT).
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. We expect 17 million people will have tried UBI auto insurance by the end of this year.
In a new report from BI Intelligence, we examine the impact of the IoT on the insurance industry. From free fitness trackers to track individuals’ exercise habits to drones to assess damages in unsafe post-disaster conditions, we analyze current US insurance markets — including the auto, health, life, and property insurance markets — and look at ways insurers are integrating IoT devices.
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.
In full, the report:
- Forecasts how much auto insurance companies will save from advancements in car safety technology.
- Identifies potential barriers that could keep consumers from adopting UBI insurance policies.
- Examines how various insurance companies are already utilizing the IoT.
- Analyzes how startup insurance companies are optimizing the use of IoT devices.
- Discusses how consumers will benefit from insurance companies utilizing the IoT.
Get the full report here.
Image and article via Business Insider