Insurers are giving out mixed messages on their ability to adopt and take advantage of IoT – the internet of things.
As smart devices enter more homes, offices and workplaces, insurers stand to benefit from real-time data analytics from their customers. But several studies show that they are unready.
First, they lag behind in digitising their own processes. A study by Lexis Nexis earlier this year, ‘Defining your digital strategy in a disruptive world‘, found only four percent of personal lines insurers claim to be completely, or almost completely, digitised. Without digital processes, they will be unable to link to devices in their customers’ homes.
By contrast, 92% in the same study said increased digitisation was disrupting the market.
Among the large insurers, Aviva, RSA Insurance Group and Legal & General offer “leak-bots” that detect water leaks in their customers’ homes. But the adoption of such devices is slow.
Second, nine out of ten US insurers say smart devices will improve their relationships with customers, according to the NTT Data report, IoT Disruption and Opportunity in the US Insurance Market. But those expectations are not shared by members of the public – with only 16% saying they would sign up to smart devices and insurance policies.
Insurers also said there were technical challenges to accessing and analysing customer data.
IoT seems to be a great idea in principle for insurers. But in practice, there are significant hurdles and risks to getting it right.