has released a report detailing the future of the ‘Internet of Things’ (IoT) and the insurance industry is set to play a key role in its development.
The rise of IoT, or interconnected devices that use data about us to make our lives easier, was called “the start of another industrial revolution,” by Dr Shawn DuBravac, co-author of the two-part report and chief economist at the Consumer Electronics Association.
“IoT presents startling new opportunities for businesses, many of which remain obscure to the non-expert,” the report states.
It is not just the use of wearable technology and the increase in smart applications for homes that will see the IoT develop but businesses will also be greatly affected by the rise in connectivity.
“Businesses that aren’t in the consumer market might mistakenly believe that IoT has nothing to offer. Yet the implications that IoT will have on all levels of business operations, no matter the industry, will range from the mundane to the profound.”
The report stresses that while there is seemingly unbridled opportunity in the rise of the IoT over the coming years, great risks also present themselves and it is here that the insurance industry must play a part.
“All opportunity, however, comes with some level of risk and with IoT the risks are just as important as the rewards. From cyber breaches to shifting questions of property and products liability, businesses cannot afford to enter this new technological world unprepared.
“For example, every object that connects with the Internet is another entry point through which the cyber-criminals can enter a business’ enterprise system. Equally dangerous, in a world where machines replace humans as the decision-makers and sensors are continually capturing data, serious questions of liability, resulting physical damage and privacy arise.
"For businesses to fully realise the great potential of Internet of Things, they will need to be prepared for risks that lie ahead. The insurance industry is particularly well placed to help businesses navigate this new technology world. Indeed, many of the elements that have converged in IoT have long been used by insurers to better understand risk and improve safety. And as insurance helps businesses adapt, so too will it adapt to improve its core processes and functions.”
The report lays out specific risk areas that could hamper businesses over the coming years as “privacy, cybersecurity, and property and products liability,” and notes that the insurance industry could be the industry to gain the most from the use of IoT.
“In many ways, the insurance industry stands to gain the most from embedded sensors that produce massive amounts of data, which will provide deeper insights into minimising risks to customers. Long at the center of data-driven analytics and risk mitigation, the insurance industry will be ready to help maximise businesses’ IoT opportunities and minimise their exposure.”