5 Ways IoT is Changing Insurance

You may appreciate IoT – for insurance, and you may not. Whatever you may think about the Internet of Things (IOT), generally, insurance industry experts think that the IOT will have significantly impact your insurance products, risk pools, loss control, data collection, and sharing of information. For those of you who aren’t so sure about it, here are some of the best things we found out about this feature.


  • Usage-based insurance. Currently, insurance companies gather information from the vehicles of potential customers — think Progressive’s Snapshot — by combining telecommunications with information technology (telematics). They want to determine the vehicle’s history of speed, turning patterns, driving distance and other metrics in a particular geographic area in order to fix a price for insurance coverage how drivers are actually using their automobiles. In the future, IOT devices will talk to each other and give a more precise picture of this type of data, in real-time . The carriers of the future will know more about you and the steps you take to change your habits. IOT will enable carriers to reduce loss ratios, improve growth and margins. Insurance analysts expect that it will prove financially sound for both the carrier and the insured.
  • Sensors: Homes and businesses have been using sensors for a while to track light usage, temperature, toxic fumes, and other metrics in our buildings. Up until now, the sensor reported its information one-way. With IOT, the communication becomes two-way. The sensors will alert customers to the potential for dangerous conditions and reduce the risk of loss from environmental factors that the sensor recognizes as flawed.       Insurance carriers like this aspect because consistent monitoring reduces the risk of a problem spreading or in the case of immediate threat contact the authorities, fire, or health services automatically.
  • Biometrics: We are all familiar with smart devices we call “wearables”, like Fitbits. With the IOT emergence and the improved data enhancements, wearable devices will enable health providers to determine compliance with rehabilitation appointments for disabled patients. Employers will monitor employees activity times and the monitors will even track your heart health. Smart devices will get smarter, communicate with each other and become more customized to your behavior. In the future, biometric devices will not only collect information but report it back to the wearer or to the wearer’s physician, an employer or insurer. A monitor tracking blood chemistry, for example, will alert the wearer to a potential heart attack. This is one are of IoT that is already starting to gain traction. In fact, a recent CB Insights survey shows there are now more than new 50 start-ups with focusing on wearables for the life insurance sector alone.
  • Diagnostics:  Manufacturers embed smart sensors in all sorts of machines, from toys to appliances to industrial machines. As these devices are internet enabled and capable of “talking” to other smart devices, insurance carriers that provide warranties on these various smart devices will be in a position to sell products that offer reports identifying potential impending problems with the device before the problems happen.
  • Carriers’ transformation: The biggest change will occur in the way carriers operate. The tremendous amount of data will mean insurance companies have to figure out the logistics: how are their legacy systems going to communicate with all these devices, how will they store all this data that smart devices deliver; how will they sort through the information and make some sense of it. Some industry analysts predict the IOT will consist of billions of smart devices sending 50 trillion gigabytes of data by 2020. That is four, short years away. The time to figure out the logistics of these changes is now. The in-house IT department meet the need, not only in size but in sophistication. Carriers will need to not only look internally but at third party partners to help streamline and modernize to meet the come wave.

If you want to read more about how the Internet of Things will relate to the insurance field, please see the article entitled “IBM Internet of Things for Insurance“.

To talk more about how FAST is preparing insurers for the IoT future give us a call at 732-225-0008 or visit us at www.fasttechnology.com


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