Insuring insurance

How IoT can be harnessed by a sector that is gradually adopting technology

The Internet of Things (IoT) through its disruptive capabilities has managed to play a transformational role across industries. It has become imperative for organisations, irrespective of the sectors, to explore new avenues where the potential of IoT can be harnessed from a business perspective.
 
In India, the insurance sector, once considered a laggard in technology adoption, is shedding this image by adopting disruptive and emerging technologies across lines of operations. Over the last few years, considerable investments have been made by the industry on IT tools such as big data, analytics and chatbots to address a gamut of business challenges that include combating fraudulent claims, designing personalised policies, improving insurance persistency, enhancing customer experience and so on.

 
It is forecasted that between 2015 and 2025 the insurance industry will experience 10x productivity change. As customer understanding of risks is changing dramatically, it is time to make insurance intelligent, inclusive and dynamic. But given its competitive nature, there is a need to develop intelligence to transform the industry from being remedial to preventive.
 

Nowadays, sensor-based wearables and IoT-based devices are altering consumer behaviour. Additionally, customers, especially the young and tech-savvy ones, highly value digital engagements with insurers. Such trends make it imperative for companies to offer digital-based personalised and compelling offerings. According to the recent Capgemini and Efma’s World Insurance report 2017, the young and tech-savvy customers represent important segments in terms of incremental revenue potential; however, they are also more vulnerable to attrition. Moreover, it has been observed that as the proportion of these segments continues to rise, their preferences will gradually become mainstream. As a result, it is necessary that insurers cater to the young and tech-savvy’s clear preference for the digital medium thereby ensuring they continue to build and maintain relationships with them.

 
For instance, health insurance companies can help customers maintain a healthy lifestyle by monitoring and analysing the data streams from their wearable devices such as fitness bands their tracking fitness activities at partner gyms where IoT sensors are deployed. All the information collected from these data streams can be analysed to understand the customer’s fitness regime and accordingly they can be recommended the diet and exercise they need to follow to achieve fitness goals. Additionally, to make sure customers follow the suggestions, they could be incentivised by offering lower insurance premiums or reward points, which can be redeemed at partner outlets for health and wellness expenses.

 
Leveraging IoT to move towards preventive health care is just one of the first steps insurers have taken to make this technology integral to their processes. Other areas where IoT can make a positive impact are underwriting, claims management, on-boarding and product pricing. The intelligence gathered through IoT can give insurers deeper insights into their customers’ behavioural patterns and risks that can be used to improve all these aspects. Consider claims management or customer on-boarding; in either case insurance must make the process quick and hassle-free. This can only be made possible if insurers have the vital information at their disposal to swiftly detect fraud or design personalised offerings.

 
The bar in customer services isn’t set by other insurance companies, but by other experiences customers have in their daily interaction with the Amazons or Ubers of the world.
 
Competition comes from all directions and as many products become commoditised, Indian insurers need to realise that they have to differentiate them through compelling customer experiences. So, it is apparent that as the role of IoT in the insurance space continues to grow, health insurers will harness its transformative potential to ensure the health of both their businesses and customers are in good shape!