Risky Business: IoT’s Impact on Insurance
I enjoy reading about how the data collected by Intelligent Systems will help people live better lives. It’s a fascinating time in human history, and we’ve all heard great stories about the potential of connected devices to improve our health, make us safer, and make everyday tasks more convenient.
That’s why I really liked Douglas Turk’s article for Property Casualty 360°, “Internet of Things will change risk for retail insurance brokers.” It’s a specialized piece, but it’s worth a read if you’re interested in the impact Intelligent Systems are having.
Mr. Turk’s premise is that connected devices are creating a future in which risk can be “instantaneously aggregated, measured, predicted, interpreted and transacted.” And for retail insurance brokers, “these technologies have the potential to redefine the speed and frequency of how insurable risk is assessed, priced and sold.”
The article makes the following predictions:
- “Auto insurance will be transformed from a world of annual policy terms that in essence ‘mark up the cost of accidents’ to insurance offers and transactions that are made in real-time to drivers, based on instantaneous data coming from geolocation, weather and traffic patterns, vehicle informatics and driver experience.”
- The ability to monitor severe weather events and define pricing in real-time as risk develops “will change how capital is deployed and also transform the role of risk management during crisis situations into a model more akin to currency hedges and derivative trading.”
- IoT and big data will “begin to redefine the rules of [international] trade and the underlying rules of risk.”
Mr. Turk encourages brokers to “understand the tools and capabilities of what technology can provide” so they can meet changing demands and create “a new standard of possibilities.”
We’ll keep an eye out to see if any of these predictions come true, and we’ll let you know how the insurance industry—as well as many other industries—continues to evolve as Intelligent Systems thrive throughout our society.