We see the memes on our Facebook and Instagram feeds on an almost daily basis. “Easy way to frighten kids this Halloween: tell them what the world was like before smartphones,” or, “This was summer before smartphones.” They harken us back to a simpler time, when kids actually played outside, or rode their bikes through the neighborhood. But was life really simpler?

Imagine this scenario: It’s the mid-nineties. You have just moved into your first apartment. It’s a third-floor walkup and your air conditioner is a window unit in your living room. Though you don’t have much – you’re a recent college graduate after all – your parents have told you how important renter’s insurance is. So, you call your insurance company and they send you the application. You fill it out, sign it, write out a check for the premium, and set it aside to put in the mail the next day. That evening, the person in the unit above yours sets a pot in the sink to fill with water and forgets about it. You are awakened by the sound of water coming through your ceiling. Now, you’re on the hook for your losses because you don’t have renter’s insurance yet.

Fast-forward 15 years. Smartphones have become commonplace. We can now communicate time-sensitive information without being either at home or work, and without relying on the availability of a free phone line. Imagine how the scenario above could have played out with a smartphone and other connected technology: When you moved into your apartment, you applied for renter’s insurance on your carrier’s website, e-signed the documents, and paid your premium with an electronic debit to your bank account. When the leak occurred, you recorded the damage with your phone and filed a claim immediately. Which situation seems simpler to you?

Impact of IoT on Insurance – An Exceptional Experience

The scenarios above demonstrate how advances in technology have actually made our lives easier, simpler. It is estimated that by 2020 there will be 50 billion connected devices that exchange information over the Internet via embedded sensors – an average of six devices per person. These devices – including telematics, smart homes and wearables – have become an integral part of our everyday lives. As in other industries, insurance customers are increasingly becoming more comfortable with sharing personal information through their connected devices. Consider these very real consumer trends:

  • 78% of insurance customers are willing to share personal information for faster claims and lower premiums.[1]
  • 34% of customers are likely to adopt connected ecosystems, such as smart homes and buildings.[2]
  • 30% are likely to adopt embedded technologies, such as wearable or digestible devices.[3]
  • 77% of connected home owners would be open to seeing their insurer manage their connected home in some way.[4]

This explosive growth of connected device usage has created the Internet of Things (IoT), a network of interconnected devices, delivering real-time insights into the habits of consumers. But are insurers taking advantage of this available data in their marketing and retention efforts, and to improve customer experience?

LexisNexis Risk Solutions commissioned a national study to determine the industry’s readiness to collect, analyze and create value with data. One of the key findings showed that there is a disconnect between how insurers view IoT data in general and how they report using the data from connected devices. While 70% agree that it is important to a company’s strategy, only 20% of carriers collect data that is available from telematics, smart homes and wearables. Of those that do collect it, just 5% are actually using it in their decision-making processes. This creates a unique opportunity to leverage data as a part of your marketing program as a competitive advantage.

The insurance sector is more competitive than ever and consumers are going online to shop for the best price for policy and coverage. Technology isn’t just changing the way people interact with insurance providers, it’s affecting customer loyalty and expectations. Insurance companies that deliver a seamless customer experience will see positive returns.

Download Are You Prepared for the Insurance Data Tsunami? to learn more about the LexisNexis IoT and the State of the Insurance Industry Study.

 

[1] The Connected Home: New Opportunities for Property & Casualty Insurers, Accenture, 2015, http://ins.accenture.com/rs/accenturefs/images/the-connected-home-new-opportunitiesfor-property-and-casualty-insurer-POV.pdf.

[2] World Insurance Report 2016, Capgemini and Efma, 2016, https://www.capgemini.com/wpcontent/uploads/2017/07/wir-2016_infographic.jpg

[3] Ibid.

[4]  “Connected Homes: What Do Homeowners Want From Insurers?” Aite Group, accessed November 14, 2017, https://www.aitegroup.com/report/connected-homes-what-dohomeowners-want-insurers

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