WITH THE evolution of machine learning and artificial intelligence, we’re moving from a world focused on products enabled by the Internet of Things [IoT] to a world of IoT-enabled smart cities, households and lives. It’s estimated that by 2020 there will be more than 50 billion connected devices worldwide.
To thrive in the coming decade, most organizations need to be prepared for the rise of connected devices. In the insurance industry, never has it been more important to reassess our traditional offerings in order to remain relevant. The IoT offers an unrivalled opportunity that insurers can’t afford to ignore.
Let’s face it – nobody really wants to buy insurance. It’s a purchase made begrudgingly, and one that’s certainly not helped by a clunky, often time-consuming path to purchase. Today’s consumers want digital interaction. They want personalized shopping experiences.
The problem lies in the fact that, unlike a consumer’s favourite brand, which they might actively opt in to hear from with the latest news and discounts, typically people only want to hear from an insurer when they need them to solve a problem – and even then, they want to be speaking to them for the shortest amount of time possible. So there’s still very much a ‘what’s in it for me’ attitude when it comes to sharing data with insurers.
The solution is to offer something valuable in exchange for data that goes beyond traditional expectations. Apps that use GPS technology to track car journeys and score the user’s driving ability appeal to young drivers – all the more if they can earn points based on their overall personal performance, as with the app Shotgun. These points can then be used to unlock rewards that this demographic values, such as Starbucks vouchers.
Health insurers are giving customers free fitness trackers and offering lower premiums or other benefits for meeting daily exercise goals. We have already seen this with companies like Vitality Health, which was one of the first insurance companies to offer policies based on data gathered directly from policyholders via wearables.
Interacting with consumers and collecting first-party data from their devices allows for much more frequent, personalized contact with customers. Better yet, it gives customers more control over their premiums, affording them superior service.
The IoT also gives us the opportunity to provide a proactive service and assume the role of consultants. IoT-based analytics can be used to predict future events, such as boiler breakdowns or major weather patterns, which can help insurers to prepare customers for upcoming incidents, thus reducing damage and, in some cases, removing the need for policy payouts. Using telematics, we can offer coaching for poor decisions behind the wheel and prevent customers from needing to make claims.
As these technologies are adopted more widely, there’s no doubt that before too long the number of accidents on our roads will plummet. While this is a good thing for society, it also fundamentally changes the premise of insurance from the process of restitution to the service of prevention.
Insurers are going to need to be even stronger agents of change in order to remain relevant. One example: Fleetlights, a prototype service providing drones to light the way for travellers on unlit roads. The technology behind it is controlled via a bespoke app, meaning a user can use their phone to order a drone to light the path for the duration of their journey. This can combat the threat that comes with darker autumn nights – serious pedestrian casualty incidents peak in November at a rate that’s 42% higher than the average low in August.
There is no doubt that the IoT will completely transform the way customers interact with their insurance providers and vice versa; never has there been a better chance to understand consumers through their personal devices and be proactive in meeting their personal expectations and needs. For insurers quick to adopt a customer-centric approach, IoT devices will allow for deeper, longer-lasting relationships with consumers. Those that don’t will risk extinction when hyper-connectivity means customers may no longer need traditional services at all.
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