Insurance professionals love the idea of IoT data, but they aren’t putting it to use in their own companies. A recent LexisNexis survey of 500 of them from auto, home, life and commercial lines of business found that 70% think it’s important to collect IoT data, but only 21% have an IoT strategy and a measly 5% of those that do gather data from a variety of technologies use it in their daily analytics.
As the survey proves, it’s easy to show an interest in implementing a strategy founded on IoT data – however, it’s much harder to actually do so, in part because of a few obstacles that stand in the way.
“Insurance companies must meet the challenges from disruptive competitors by adopting an innovative approach that enables rapid solution development and rollout. Only a few IoT providers among insurers have managed to execute successful platforms, but this number is likely to rise in the coming years,” said Bob Cummings, VP and global head of insurance for SAP Financial Services Industries.
The sheer amount of data available to insurance companies is also oftentimes staggering and can be difficult to navigate.
“Insurance companies are tasked with managing enormous amounts of data such as policy details, previous claims and information gathered from adjusters, which can be overwhelming,” said Cummings. “Vast amounts of data make it difficult to understand what data is most important and how to extract valuable insights from it.”
The good news, according to the SAP VP, is that insurance companies can hone their IoT data on specific areas of focus and be on their way to becoming an intelligent enterprise.
“As organizations become more focused on the customer, IoT data can be leveraged to enhance the customer experience by providing seamless touchpoints,” said Cummings, singling out MindHome Insurance, which uses AI to interpret signals from a customer’s home and respond in real-time with notifications and preventative actions, as an example. “Using IoT data in this way not only allows the company to provide superior customer service, but helps the end customer better manage risk and lower their premium rates.”
On the backend, IoT data can be leveraged to simplify complex processes, like policy administration and claims processing, but there’s many other uses for it depending on a company’s needs.
“The benefit of IoT data is that is can be tailored based on your business goals,” explained Cummings.
SAP has seen the benefits that IoT data can bring for insurance companies through its partnerships with insurers to integrate this data into their everyday processes. For example, Meteo Protect, which offers index-based weather insurance to farmers, developed an app that leverages SAP’s HANA platform to aggregate weather-related data, analyze risk and price, and underwrite the policy.
IoT data has the power to transform the business model of the insurance company, from reactive to proactive, and potentially change the insurance industry’s relationships with customers.
“With the strategic use of IoT data, such as data from flood sensors, driving devices or fitness applications, insurers can prevent disaster from happening in the first place through real-time notifications – saving money for both the company and the customer,” said Cummings. “The increased use of IoT data among insurers will help customers see these companies as an ally and partner in safe and healthy living, as opposed to someone to call after something goes wrong.”