A recent study by Capgemini consultancy on the top 10 trend in Insurance for 2016 revealed that the use of IOT is on number one for 2016. The research reveals that insurance companies are adopting technology and the number one trend will be the use of the Internet of Things.The expectation is that insurance companies will use IOT devices to monitor data from customers on health primarily. This will drive adoption of, for example, devices like fitness trackers such a Fitbit.
However, also other examples can be thought of. Using IOT as prevention. In cases where insurance companies are able to prevent a claim they will have less situation where they have to pay. For example, if an insurance company would be able to use IOT to monitor how a restaurant is handling its hygiene rules the changes of food poisoning will be less and the times that a restaurant will call on its insurance will be less. The same can be thought of for fire prevention, flood prevention and others.
Customers health
By enabling insurance companies to monitor the fitness and health of their customers a better risk analysis can be made, by making a better risk analysis insurance companies will be able to create better and more personalized pricing schemes for individual customers.
Customer who are working on a constant basis on their health will most likely be less a risk for certain deceases and due to this can be lowering their insurance policy.
Smart home / office / workplace.
Supporting customers to leverage mote IOT which has a positive effect on a downward trend of accidents is positive for insurance companies. If they can prevent damage or injuries to equipment, assets and people the amount of money that needs to be paid in case of an incident is rapidly declining. This will pay for the business case of investing in IOT and providing this to consumers.
As an example, “American Family” works together with Nest. The partnership will deliver a Nest Protect alarm to interested American Family clients in Minnesota, and it will give those customers a 5 percent discount on their premiums. A similar effort will bring the devices and savings to Liberty Mutual customers in six other states.
Privacy questions
A question that one can ask is, do we want this, is sharing our health data worth a discount on our insurance policy. Do we want to, voluntarily, provide insurance companies with this much information for a discount. Depending on age and generation, as one of the main drivers, this answer can differ very much. Younger generation will most likely be more easily adopting this model where older people will be somewhat reluctant to participate in a model where they will share their data.
Building models and providing discount
One of the big treasure troves insurance companies are after is collecting all possible data to be used in prediction models. Traditionally insurance companies already had a lot of data which they used to create risk models and prediction models, resulting in the price for certain products. For insurance companies the entire game is around risk based decision making and promoting products that are based upon risk models.
The more data can be collected the more accurate the models can become. Secondly, the more data can be collected the more can be prevented. Customers can receive custom made products for custom pricing and insurance companies will be able to prevent incidents from happening, preventing them to pay the insured (as it never happened).
Building the platform
Building the idea is one thing, building a platform that collect all data, crunch the numbers and take action upon the data is something else. A tradeoff has to made, the more data you collect and crunch the more insights you will get. However, collecting and crunching large sets of data also has a financial cost. The right balance need to be found between the effort and money that needs to be invested and the added value and return on investment that can be achieved.
When building a platform to collect data and take action upon it can be a complex task which will take a large investment and will take considerable specialist knowledge. When looking for the right building blocks Oracle provides both onsite as well as cloud based solutions.
Capgemini has done research in both area’s. When building a large platform for collecting IOT data and hosted within your own datacenter, or a partner datacenter, Oracle Engineered Systems are advisable. You can read more about this topic is this whitepaper.
When building and deploying a solution in the cloud, Oracle provides all the right building blocks in the cloud. You can leverage a large set of cloud services in combination with the expertise from Capgemini to build the required end-to-end integration to achieved the business benefits
For more information about this topic, feel free to contact Johan Louwers directly via johan.louwers@capgemini.com