The unrelenting digitization of our physical world has forever changed how we live, work and play. This phenomenon has most recently given rise to the Internet of Things (IoT) — a global network of sensor-enabled, connected devices that link and share data through the Internet. The resulting insights allow companies to simplify processes, ensure business continuity and significantly improve operational performance.
By 2020, an estimated five billion people and 50 billion things will be connected to the IoT, and according to a 2016 CompTIA study, 83% of organizations have either started an IoT initiative or plan to. How then might commercial lines carriers get a piece of this $2 trillion pie?
We believe that in the intermediary-driven commercial lines world, carriers can use IoT insights to strengthen customer relationships and enrich their value proposition. To do so, they should focus their IoT efforts on loss prevention and aligning premiums with risk levels.
When dealing with their large-business customers, for example, carriers can use the data that customers are likely already collecting through the IoT to develop innovative services and programs for specific industry segments to improve underwriting, pricing, loss mitigation and claims resolution. These initiatives can lead to new partnerships and distribution models in which carriers work directly with device manufacturers and service providers.
For smaller customers that have yet to invest in the IoT, carriers may need to provide some education on IoT benefits. For example, while carriers may not have historically performed safety and risk inspections for small businesses, they could begin to do so with the IoT, improving their ability to assess risk exposure and prevent loss. For warehouse or restaurant customers, for example, intelligent sensors embedded on water mains, smoke detectors or other infrastructure elements could inform carriers about maintenance needs to avoid loss.