Greg Barats, CEO of insurance company Hartford Steam and Boiler (HSB), said that insurers must be ready to embrace the disruption through IoT – or risk being made obsolete by hungrier technology companies.
NEW YORK, US — Speaking as the opening keynote at IoB’s Internet of Insurance conference in New York today, Barats outlined how IoT is becoming the fourth industrial revolution, with companies moving to real-monitoring of data gleaned from telematics devices, wearables, sensors and drones. This data will in turn be monitored and analyzed by AI and machine-learning tools.
In this new era, which continues as Moore’s Law continues to make sensors, actuaries and other devices smaller and more affordable, Barats says that insurers need to morph into becoming service providers.
In fact, he says that the insurance market has little option but to change; he claimed that P&C premiums are falling on average by 15 percent per year, with higher reductions of up to 40 percent seen in the automotive insurance space.
“These are sizeable numbers”, added the Hartford Steam and Boiler CEO, who went onto suggest that insurers are at risk of being made redundant by big technology companies.
“This is an industry resistant to change…I feel strongly as an industry that we’re in a race in customer proximity and the race is going to be with technology companies providing unique solutions and services.”
Related: Swiss Re – Insurers must do or die with the Internet of Things
Find the right partners
Hartford Steam and Boiler – which has been established 150 years and which specializes in insurance for dry cleaners, power generators and refineries — has established some strong partners in the IoT ecosystem. These include its venture capital group Munich RE/Hartford Steam Boiler Ventures, which invested in smart industrial sensor manufacturer Helium earlier this year.
Barats says that VCs “fully understand the impact of IoT”, but suggested that investors are often put-off an insurance sector tightly bound by legacy systems, rules and regulations. These things, explained Barats, “hold us back from changing and morphing our business models”.
HSB has also acquired mobile app platform start-up Waygum and predictive machine diagnostics company Augury. Furthermore, the Munich Re-owned company is sponsoring the Plug & Play IoT accelerator program.
While HSB has been active in this space, Barats warns that you have to “surf your way” to finding the right partner. He said there is a danger that you decide to work with one partner, only to find a better solution on the market in the next six months.
Speaking to IoB after his talk, he said that these investments in IoT start-ups enable the company to innovate faster.
“The Internet of Things is the next industrial revolution and we have to position ourselves.
“IoT start-ups are a fantastic way of jump-starting your thinking,” he said, adding that these start-ups are often able to work in a much more open environment than in traditional enterprises. They can, he explained, offer ‘clear thinking’ whilst they are less restricted by compliance and regulatory issues.
He said Waygum was an “important investment” because they are essentially trying to bring a ‘universal control’ to the industrial IoT (IIoT), while the Augury deal made sense as it fits with HSB’s core business.
IoT projects
Hartford Boiler has emerged as something as a pioneer in the insurance space over the last 12 to 24 months, with its IoT acquisitions and work in the industrial space.
Indeed, Barats said during his talk that the firm is now using thousands of IoT sensors on various types of machinery, to understand more about how they are performing, and how much of a risk there is of them breaking down.
The firm has deployed 1,700 sensors across 325 locations, with further plans to deploy 50,000 more in the coming months. Further details on these deployments were unavailable at the time of writing.
The CEO continued that the firm has evaluated some 200 technology companies, tested technology from 45 firms, and currently gets up to 9,000 alerts sent from IoT devices.
And yet, even though he previously said that insurers must do or die with IoT, he did suggest that the role to success and ROI is not necessarily an easy one. “IoT is hard – but it sounds easy.”
Related: The Internet of Things could result in fraud reduction in insurance
You can see Greg Barats interview shortly on IoB TV. For more news on IoT in insurance, click here to sign-up for our weekly newsletter.