I know I’m not the only one who marvels at the number of emails that show up daily. There are always a few newsletters and reports that I save to read later (and never quite get to). However, one report that I read immediately is the latest installment of Deloitte’s series examining the nature and impact of the Internet of Things (IoT).
Readers of SpeakingDIRECT who know IWCO Direct understand we have a number of clients in the insurance industry. In order to be a valued partner to our clients, we do our best to stay current on the trends that impact their business model. We know that’s key to developing a marketing strategy that results in a positive ROMI.
The research report from the Deloitte Center for Financial Services (DCFS) that appeared in my inbox this week is titled, “Opting in: Using IoT connectivity to drive differentiation – The Internet of Things in insurance.” It’s a fascinating read that begins by talking about how 19 years ago, Progressive Insurance pioneered the use of the internet for consumers to purchase auto insurance online, in real time. As the authors describe it, “Progressive’s innovative approach broke several long-established trade-offs, shaking up traditional distribution channels and empowering consumers with price transparency.” And in 1997, they didn’t even have Flo.
The report goes on to describe how the insurance industry as a whole was transformed by the advent of the internet Customer segmentation capabilities evolved and previously uninsurable market segments were served. The pages that follow describe how this innovation 19 years ago may be a precursor to the next generation of digital connectivity in the industry. As the IoT grows, the ways in which we are able to engage with our cars, homes and bodies expands exponentially.
According to the report, IoT technology has the potential to reshape the way insurers assess, price and limit risks. The DCFS, in conjunction with Wikistrat, performed a crowdsourcing simulation to identify IoT’s implications for the future of the financial services industry. The scenarios they describe as a result of the simulation are fascinating. For example, insurance companies could not only monetize risk, they could also work with appliance, automotive and other equipment manufacturers to reduce actual risk. Several examples are provided that would ultimately reduce premiums and improve customer retention rates to help move the industry away from the commoditization that pricing transparency created.
If, like me, you’ve ever experienced a broken pipe in your house, this next example will resonate with you. Smart home sensors could detect moisture in a wall from pipe leakage and alert a homeowner (like me!) to the issue before the pipe bursts. These sensors could also be placed in business properties and commercial machinery to mitigate property damage, prevent injuries to employees and customers, and ward off losses from business interruptions.
The Internet of Things Will Transform Health and Wellness Too
On the wellness front and already entering the market, socks and shoes have been developed that can alert diabetics to potential foot ulcers, excessive pressure and how well blood is pumping through their capillaries. Imagine a world in which your dear cousin (like mine), who happens to have diabetes, wears socks and shoes that help avoid costly medical and disability claims and the life-altering amputation her mother had to endure.
I only had to read as far as page 4 to learn that IoT applications for the insurance industry can improve customer experience, which in turn enhances loyalty and retention. At the same time, the unrelenting market demand for lower pricing will also occur.
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