8AUGUST 2021Isabelle Flückiger - Director New Technologies and Data at The Geneva Association - and Matteo Carbone - director of the IOT Insurance Observatory and board member of Net Insurance. Originally published on XPRIMM Insurance Report Full Year 2020The Internet of Things ­ A global paradigm shiftRisk prevention is inherent to insurance. Recent developments in technology and the corresponding availability of data, however, have the potential to influence change in this space. A key driver of this development is the Internet of Things (IoT), the growing network of connected devices ranging from consumer wearables to industrial control systems. IoT usage is maturing in both corporate and consumer businesses. Indeed, the adoption of IoT by all industries is steadily growing, and according to a recent report by Kaspersky, 61% of enterprises already use IoT applications. So, nearly two thirds of insurers' corporate customers have IoT applications in place, and can potentially integrate the data into insurance services.The Internet of Things in insuranceThe hyperconnection between people, machines and organisations is a prevalent megatrend that we see at almost all levels of society and around the world. A recent study by Aviva revealed that the number of internet-enabled devices in the average U.K. home has increased by 26% in the last three years to over 10 devices. These developments can neither be ignored nor prevented, and the insurance industry has to adapt to this new world. Insurance IoT is a new paradigm that impacts strategy, business cases and models, and technical and leadership capabilities along the insurance value chain and in the societal risk landscape at large. In many cases, the technologies behind prevention services are tried and tested and offered by other industries. One use case for the insurance industry ­ namely the use of IoT for risk prevention ­ has been clearly identified. What is still missing, however, is consensus on how to translate the use case into a sustainable business case that benefits all stakeholders, i.e. insurers, technology providers and customers. The report ­ the first of its kind to study the shift towards IoT risk prevention in insurance ­ is a collaborative work of The Geneva Association and the Insurance IoT Observatory,[3] and is based on interviews with over 60 insurers, technology companies, start-ups, global organisations and leading academics across all insurance business lines and geographies. In order to identify actionable insights for the sector, the interviews focused on insurers that have already developed successful IoT-driven prevention services.How the Internet of Things is Reshaping Business Models in InsuranceMatteo Carbone, Founder, Director IoT Insurance Observatory The report therefore provides insight into what a market can aim to achieve, and cannot be seen as representative of the current maturity of the insurance market in general.Approaches to risk preventionPrevention means reducing the risks faced by insurance customers. It can be achieved in one of two ways:· Directly, through real-time risk mitigation solutions· Indirectly, by promoting safe behaviours over a longer period.Prevention services are not new in the insurance industry; for years, insurers have provided consumers with loss prevention advice and risk engineering teams advise businesses in commercial lines. Ways to prevent risk, however, are changing. The industry is mainly experimenting with striking a balance between finding valuable services for customers, technological solutions and economic feasibility. Though maturity levels are still low in general, we found successful examples across all lines of business.Real-time risk mitigationReal-time risk prevention is most mature in commercial lines, driven by the loss control culture present in commercial insurance. Field inspections by engineering teams are well established and enhancing this work with new technologies seems like a natural step. A few personal auto insurers around the world have integrated real-time CXO INSIGHTS
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