Insurers and brokers ignoring the possibilities of Internet of Things will be left behind
The Internet of Things (IoT) is no longer a fictional concept in sci-fi movies, it's a reality with over 20bn connected devices in use today. Based on the exponential growth of the IoT, it's predicted that over 46bn devices and sensors will connect our homes, cars and businesses by 2021.
Progressive insurers and disrupters recognising the potential business benefits of the IoT are developing innovative services using real-time data mined from smart home, vehicle sensors, mobile GPS and networked grids and businesses. Smart data analytics is facilitating the provision of tailored claim prevention services, which are challenging traditional insurer modus operandi, and will increasingly move insurance into tailored risk prevention service provision.
But technological development comes at a price. Significant regulatory challenges are looming – not least in regard to data-led services or marketing campaigns which are at the heart of the 'privacy by design' requirements of the new regulations that come in force in May 2018. In addition, product liability and insurance prudential regulations that were created pre-IoT are likely to come under scrutiny.
We believe that insurers and brokers taking a cautious 'watching' approach in this interconnected world risk being overtaken by new kids on the block if they don't embrace the inevitable change technology will bring to the industry. But those that embrace change will also need to keep a weather eye on regulatory oversight which will inevitably get tougher.
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