Brett Jurgens
Between TVs, refrigerators, ovens, light bulbs, cars, fitness trackers and jewelry, it seems like everything these days is connected to the Internet. It’s probably safe to say that you’re already using a few connected devices in your daily life. You’re not alone; Business Insider Intelligence estimates there will be nine billion IoT (Internet of Things) devices worldwide by 2018.
This ability to pack an Internet connection into essentially any physical object will have some huge implications for the insurance industry over the next decade. As insurers look for ways to innovate their policies and claims practices, your home, health and auto coverage plans will become more connected to your smart devices — and more personalized to your behavior.
The idea of “connected coverage” means that insurance companies will encourage you to take risk management into your own hands by leveraging IoT. Ultimately, that could mean saving a big chunk of cash.
The Future Is Actually Right Now
The way we engage with our cars, our homes and even our own bodies is getting smarter each day. To really understand how these devices could impact your relationship with your insurance company, let’s explore some real-life problems and the possibilities of a connected coverage future.
In The Car
The problem: You got one speeding ticket, then rear-ended in a parking lot last year, but you have no way to prove you *really* are a great driver.
The solution: Offerings like NationWide SmartRide and Progressive Snapshot use video and telematics technology so you can record your driving habits and share real-time information with your insurance provider to get discounts for good driving behavior.
The possibilities: For the insurance provider, now there’s an opportunity to observe drivers in the habitat of their cars and offer solutions that could prevent reckless driving and promote safety.
What if your insurer could notify you if you were close to reaching a risk threshold, and text you if you’ve been driving too fast lately or running too many yellow lights?
At Home
The problem: You’re always doing damage control on big-ticket items around the house.
The solution: Companies like Nest, Notion and Rachio are building sensor and Wi-Fi technologies that can detect things like motion, sound, temperature, humidity and water presence so you can avoid hefty claims later.
The possibilities: New technologies likes these help you keeps tabs on home maintenance before a small issue becomes a big problem.
What if your walls could tell you they are losing heat, or your roof could report a potential leak before a storm hits? What if you could catch a leak under the sink before a pipe burst? Or what if your stove could automatically shut off if you leave home, or your sprinklers turned on if there was a fire?
With Your Health
The problem: Your doctor said your cholesterol is too high and it’s time to take more responsibility over your diet.
The solution: Fitness trackers like Fitbit and Jawbone, and smart accessories like the LG Smart ThinQ refrigerator and Vessyl smart cup, can help keep tabs on your activity and diet.
The possibilities: By sharing with your health provider information about your exercise habits and food intake, you can demonstrate preventative behavior.
What if you got a monthly rebate for stocking your smart fridge with healthy fruits and veggies, blending up a smoothie with the right daily vitamins in a smart cup or sharing stats from your workout to prove you’re surpassing your recommended 10,000 steps?
All this may sound like a Jetsons-esque future, but the truth is, it isn’t far off from reality.
You + IoT + Provider = A New Dialogue
Something big came along about a decade ago that enabled a new consumer behavior: social media. Facebook and Twitter made it possible, really for the first time, for us to easily connect with the brands with which we choose to do business. This ability to have a direct conversation with brands escalates even more with IoT.
As IoT continues to explode, so too does the pool of unique data to which insurers will have access. Accenture found that 78 percent of insurance customers would be willing to share personal information with their insurance companies in return for benefits like lower premiums or faster claims settlements.
For your insurance company, data from IoT devices can offer a much more calculated look into hazard and risk based on your distinct daily behavior. That means more hard evidence to support the claims process, more information to prevent claims in the first place and a more frequent dialogue between you and your providers.
A Shift From Historical Data To Actionable Insights
Perhaps even more exciting is the possibility for your insurance company to turn into actionable insights the data you share from your connected devices. Why is this so huge? Because all this data makes it possible for insurers to identify trends and patterns based on your behavior.
It’s a common practice to look back in history to make more informed decisions about the future. The real-time data that IoT provides will make it possible for your insurance company to analyze new information and cross-reference it with historical information to make predictions and suggest preventative measures.
Over time, this could mean that insurance as we know it — a model built around reactive claims — could shift to a model that’s built around prevention. You’re already tailoring your smart devices to serve your unique needs, and new IoT technologies are proving they have what it takes to mitigate risk and reduce claims losses.
Even more, IoT lays a foundation for more customized insurance plans. The old model of tiered insurance lumps you into a plan that considers the “average” person’s risk (or your home’s or car’s) — which means you essentially pay for those average mistakes. But you aren’t average; you are unique.
The new model will adopt strategies that observe your behavior and the specific measures you take to mitigate risk, which will allow for complete personalization to match your individual demands. In the long run, that’s sure to save you money. And with all those savings, maybe you can add a new IoT device to your collection!
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