A new report by LexisNexis Risk Solutions has found that many insurance carriers understand the value of data generated by the Internet of Things (IoT) – but few have the means to turn IoT data into action.
The report is the first comprehensive research study to determine the insurance industry’s perspective on collecting, analyzing and using IoT data. Entitled the “2018 LexisNexis IoT and the State of the Insurance Industry Study,” it surveyed 500 US insurance professionals from auto, home, life and commercial lines of business.
LexisNexis uncovered that while 70% of respondents agree that the gathering of IoT data is important to the insurance strategies of their companies, only 21% have an IoT strategy, and only 7% have the human and technology resources required to utilize the data in decision making. Additionally, only 5% of those that said they currently collect data from telematics, wearables, connected home and properties said they use the data in their day-to-day analytics.
"Carriers already use data to make better decisions. But given the looming tsunami of data from the Internet of Things, we were surprised to learn how few are prepared to leverage it into their business strategies and customer offerings," commented LexisNexis Risk Solutions CEO of insurance Bill Madison.
Madison noted that although carriers are underutilizing IoT data, this means the playing field is “currently relatively even,” creating an opportunity for forward-thinking insurers looking to fully harness IoT data.
“Partnering with an experienced organization to cleanse, normalize and analyze IoT data can help carriers gain a first-mover advantage in enhancing their existing portfolio and developing new products,” he recommended.
The report also suggested that one of the reasons why insurance carriers are lagging in the utilization of IoT data is that most companies think of IoT in “tactical” terms rather than “strategic.”
Most carriers that participated in the survey described IoT in tactical terms, such as "a network of connected devices,” whereas only a few discussed IoT in terms of strategic uses for underwriting, claims and other analytics.