DIGITAL TRANSFORMATION
Connected devices have the potential to completely overhaul insurers ' relationship with risk and data – and there ' s more of them in our homes than ever
WRITTEN BY : ALEX CLERE
Consumers have more connected devices in their homes than ever before , but insurers are rarely using them to their fullest . In fact , research shows that the average US household now owns 25 different connected devices – and consumers are becoming more open to sharing their data with insurance companies , but only if they get the right incentives in return .
As the insurance industry transitions towards a prevention model , connected devices could prove an invaluable tool for insurers . So what are the main areas of application and how can insurers use connected devices to improve their product offering ?
Connected devices and auto insurance “ The volume of data flowing from connected things is growing at a rapid rate ,” says John Beal , Senior Vice President , Analytics , Insurance for LexisNexis Risk Solutions . “ Just consider how all cars are expected to have advanced levels of connectivity by 2030 , generating , receiving and sharing a wide range of data into ecosystems including the car manufacturers . Data normalisation through ML techniques is creating standardisation and consistency for usage-based insurance based on this data .
“ Whatever the source of data , data normalisation means consumers can enjoy an improved shopping experience using the data they have consented to share from their device or vehicle , and insurance providers have access to consistent quality standards , helping to provide more accurate pricing . Individuals then benefit from being judged based on their individual behaviours as is already the case in telematics insurance , rather than paying premiums based on average habits .”
As Beal alludes to , many insurers offer drivers discounts on car insurance premiums as a reward for good driving . This can be achieved through an app , aftermarket telematics devices plugged into the car , or using onboard technology . This provides a financial incentive and also allows insurers to offer better service . insurtechdigital . com 65