The Internet of Things (IoT) – the network of interconnected objects that use embedded sensors to exchange data – is already disrupting many industries, from automotive to healthcare to energy and retail. But the insurance industry is lagging behind, even though IoT is already redefining the industry. As more consumers become comfortable with IoT technology, they will expect benefits from the businesses they patronize – including their insurance carriers.
For those that are capitalizing on the massive amounts of data available thanks to IoT, most are only doing so through their auto insurance offerings. But what about other sectors of the industry? Will data from a manufacturing plant or warehouse floor influence workers comp and industrial risks? More and more people are using wearables as health monitoring devices. Will insurers use this data to determine rates for health insurance? What about home insurance for a connected home?
In 2017, LexisNexis commissioned its IoT and the State of the Insurance Industry study to determine the extent to which carriers are ready to collect, analyze and gain insights from IoT data. An independent research firm conducted the national survey of 480 marketing, underwriting, product management and claims professionals from top 100 U.S. carriers from auto, home, life and commercial lines of insurance.
Findings revealed that while most carriers recognize that IoT will impact the industry, few are actually collecting the data, and even fewer are analyzing it now. Most carriers do not currently have a defined IoT strategy or dedicated IoT resources. But, the good news is that many are planning to within the next 3 to 5 years.
Insurance and the Connected Home
As more new homes are built, and older houses are remodeled, homeowners are turning to smart devices to help them manage their households. From smart thermostats to smart lights and appliances, to intruder alarms that are connected to security providers, technology in the home is becoming the norm, rather than the unusual. The question is, how will the home insurance industry adapt to fast-changing technology and customer expectations?
Of the home carriers surveyed for the study, only 24% said they are currently purchasing or collecting connected home data, and only 1% report using it in decision making. Even then, their application of connected home data is limited to claims management, customer acquisition and retention, pricing and risk selection.
Connected homes – those with smart home systems – provide an opportunity for insurance companies to change up their business models and personalize their customer interactions and product offerings.
Connected Home Benchmarking Assessment
Is your company taking advantage of connected home data to make smart, informed decisions about your home insurance offerings? To see how your practices compare with other carriers in the industry, take the LexisNexis Risk Solutions Connected Home Benchmark Assessment. Answer six questions designed to determine how gathering IoT data fits into your current – and future – insurance strategy, and how your strategy compares to those surveyed in the IoT and the State of the Insurance Industry study.
Prepare for the Insurance Data Tsunami
Thanks to the rapid growth of IoT, unprecedented amounts of data will be generated by connected devices. But this will also present new challenges for home insurance carriers. Download the IoT and the State of the Insurance Industry study whitepaper today and learn how you can stay on top of all the changes facing the insurance industry in this new connected world.