Just when we thought we’ve embraced modern technology and its impact on the insurance industry, we are thrown yet another technological advancement, Insurance 2.0. This is when the industry old meets the new by linking our lives and diminishing risks through the Internet of Things (IoT).
As you may be aware, the IoT has already been playing an important part in predicting and reducing claims as well as managing risk. Homes that are connected have sensors warning owners of risks like fires or flooding, and driverless cars will ideally balance mitigation and risk management.
Insurers are at an intersection as to how to respond to Insurance 2.0 and the IoT as it’s changing the way we live and conduct business. A lot depends on technology implementation, but if the savvy companies quickly change their business models, the rest will probably follow within a year.
One could not argue about the considerable life improvements if car accidents were prevented, medical ailments predicted, and household calamities averted. Innovation and technology are granting us these opportunities to prevent and hopefully eliminate risk all together.
Reducing risk is a benefit to all. Technological advancements combined with connected devices are exploding and the industry might find itself at an intersection of traditional risk mitigation or embracing a highway driven by technology.
Insurance of the future will bear little resemblance from the current business model. Insurers will need an approach that’s more in line with the advancements in technology if it truly wants to benefit. Undoubtedly, these advancements create some angst as the industry has been accustomed to operating on a more traditional system. Identifying methods to gain access to information given by customers via technology adds value to the relationship between the customer and insurer. Being able to leverage that information, will lead to successful outcomes.
The IoT model is all driven by data and it would behoove both policyholders and insurers to initiate a collaboration dedicated to improving total quality. Additionally, this will add significant benefit to customers and will provide opportunities for insurers to determine risks and reduce payouts for claims.