Customer Experience

New Themes Emerging on Role of IoT

The IoT in Insurance event just concluded in Miami with an impressive lineup of 32 speakers over two days (including yours truly). Above all, the event indicated that the IoT is alive and well in insurance. Insurers are exploring, strategizing, investing, piloting and putting real value propositions into the marketplace. Most, if not completely, from the participants think that the is paddling into a huge wave – those firms that are aggressive will catch the wave and revel in a great ride. The remainder will get swept under. The industry is in for major disruption and transformation within the next 3 to 5 years … and the IoT will have a large role. Although the potential opportunities and threats are vast and varied, numerous important themes emerged in the conference.

Customer Experience Is Key: Customer expectations are a driving force of change. The IoT creates many opportunities to transform interaction with customers: Real-time data enables more active advice and communications, and there's big possibility to shift from the few touchpoints a year to daily interactions. Insurers that are already leveraging IoT devices in policyholders’ homes, vehicles and businesses are finding out how to offer new value.

It’s All About the Services, Not the Things: So much cool stuff is happening available! There are so many new IoT-based companies, devices and services that it is almost impossible to keep up. Insurers have to search out the “things” which make sense and create services around them which are valuable to customers. The Ring doorbell, the Roost smoke alarm battery, the Google/Nest thermostat, the leakSMART water detection device and many others are interesting separate devices but provide much more value when integrated with an insurance offering.

Behavioral Science Is Increasingly Important: Since the dawn of the industry, insurers have relied on actuarial science to develop and value products and arrange for losses. Loss experience happens to be king in terms of understanding and evaluating risk. The IoT now offers the opportunity to leverage real-time data and interactions to shape behavior and change the danger equation, with the objective of improving safety and helping individuals live longer, healthier lives.

Ecosystem Participation Is Essential: Insurers are not going to attend the middle of the universe in the connected world. Actually, the entire notion of the connected world leads to a blurring and overlapping of traditional industries. Networks of partnerships – ecosystems – are now being built round the connected car, connected home, connected agriculture and lots of other domains in the connected world. Each ecosystem is loosely defined and rapidly evolving – and insurers must figure out how they participate and contribute to a particular domain.

Data, Platforms and Standards Form the Foundation: One thing is for certain. The IoT generates mountains of information – both structured and unstructured – orders of magnitude more than insurers and others are used to capturing, routing, storing, analyzing and leveraging. Insurers must create standard platforms and new standards for data exchange to avoid yet another group of operational silos.

Innovation Is Mandatory: The options are virtually endless. Many insurance professionals begin to see the possibilities and therefore are dreaming up offerings and services. In the end, the winners will be those that can create a culture of innovation, having a continuing commitment to reimagine the company, and the willpower, brainpower and resources to bring ideas to fruition – quickly.

One last observation: Many are looking forward to the opportunities for that industry but fearful that insurers won't move quick enough. Innovative start-ups, as well as the global behemoths of the digital age (i.e. Google, Amazon, Facebook), move from idea to implementation in days or even weeks. There is the potential that insurers will be relegated to back-office administration while some own the client experience. Despite that fear, it's heartening to determine a lot of insurers making aggressive moves, a lot of Millennials receiving the latitude to innovate and so many partnerships revealed that would have been unthinkable even five years ago.

The industry is not going to go away, but there will clearly be winners and losers within this era – and in all likelihood many surprises on the way.