IoB Insiders Concirrus CEO Andy Yeoman argues that insurers must look to derive more value from connected IoT technologies, if they are truly to establish better relationships with customers.
Last week’s CES in Las Vegas reminded us that the number of smart, connected devices in our world is well and truly on the rise. From super-fast electric cars to the latest in smart TVs, the show is a reminder of our ever-increasing reliance on technology and the value it generates in our lives on a day to day basis (not to mention the relative proportion of our incomes that we spend on it).
But are we really getting enough out of our tech? Even compared to a decade ago, the devices in our homes, cars and workplaces are performing truly amazing feats of service, operation and entertainment. As well as this, they are generating more data, but we’re not making sufficient use of it yet. The information that connected devices can provide us with has the potential to revolutionize many industries and areas of life, changing business models as well as lifestyles for the better. What 2017 really needs is a means of pulling this information into one place and turning it into real human value – applying it in a way that allows us to make more intelligent decisions and take more beneficial action.
2016 saw some cogent arguments for connected technologies and the Internet of Things across a variety of industries, including insurance. VC funds and incumbent industry players saw the value of these arguments and made enormous investments, generating a huge amount of hype. From connected alarm systems to micro insurance, examples of insurtech offerings started to emerge across the board. But we predict 2017 will see a select number of insurers and technology companies (including us) take things further. IoT has greater potential.
Related: Why insurer Hartford Steam Boiler is investing in Internet of Things start-ups
Click here for details on our second annual Internet of Insurance conference, taking place in Greater London on 5-6 April 2017. This exclusive forum is for business leaders exploring the opportunities of IoT to minimise risk, prevent claims and improve customer experience.
Insurers need to look ahead with IoT
However, if insurers are going to build connected technology into their business models, there are a few new year’s resolutions that must be made. Firstly, the desire to be innovative is commendable but insurers need act out their desires if they are to make meaningful progress. Using the valuable resources they have at their disposal – their balance sheets, their knowledge of the customer, their knowledge of the regulatory environment – insurers simply need to start the process.
Secondly, there needs to be an identifiable end goal in mind – a vision of what the relationship with their customer looks like in the future. One strategy that we noticed cropping up repeatedly in 2016 was ‘technology spread betting’, whereby large insurers and financial organizations picked a range of exciting, emerging technologies and invested in all of them to see what took off. There needs to be a set of clear objectives for the business and a strategy to meet these objectives. Without a vision, progress is likely to be slow and new market entrants will steal market share. Indeed, one of the reasons we’ve had so much interest in our software platform is that it caters to a clear set of business challenges – namely the ability to analyze risk in new ways.
So, 2017 needs to see a more concerted effort to derive tangible value from IoT and connected technologies. ‘One-dimensional’ IoT insurance policies that merely involve offering discount to the customer in exchange for installing a piece of connected technology will slowly but surely be overtaken by more sophisticated examples.
Perhaps one of the best observations to emerge from the Trump election debacle was by journalist Salina Zito who said that, “the press takes him literally, but not seriously; his supporters take him seriously, but not literally”.
You could argue something similar about the state of IoT in 2017; large organizations across many industries are now taking IoT seriously but have yet to develop many compelling customer facing applications, whereas consumers tend to laugh at connected fridge ideas and wonder if and when big businesses will offer them better service. Insurance is grappling with this customer-provider divide right now and the next 12 months will be interesting to watch.