Insurers Are Not Ready For IoT
A new LexisNexis study says insurance companies know IoT is important, but they have no idea how to collect the data or what to do with it.
You might think that the Internet of Things (IoT) was custom made for the insurance industry. After all, what could be more useful to all those actuarial tables than detailed, real-world information from billions of IoT sensors in a wide variety of devices?
In fact, we’re already seeing the beginnings of insurance uses of IoT, including auto insurance companies giving discounts to drivers who are willing to have their vehicle tracked
But according to a new from LexisNexis, the message hasn’t penetrated very far into the famously conservative field.
Top-line results from the survey reveal a clear disconnect between what insurance companies think about IoT and what they’re actually doing about it.
IoT in Insurance
On the one hand, the hype around the IoT has had some effect: seven in 10 of the 600 auto, home, life and commercial insurance professionals surveyed said IoT data is important to their company strategy today, and even more believe it will be important over the next five years. Almost half (48 percent) said “the ability to collect and use IoT data will define industry leaders.” That’s great, but given the rest of the results, insurance industry interest in IoT doesn’t seem to run very deep.
As it turns out, only 21 percent of respondents say their companies have an IoT strategy at all. Worse, a minuscule 7 percent say they have the “human and technology resources required” to use IoT to make critical decisions. Even among respondents who actually collect IoT data from “telematics, wearables, connected home and properties,” an embarrassingly low 5 percent use that data in their day-to-day analytics.
If you’re not using IoT in decision-making or analytics, why are you bothering to collect the data in the first place?
Is IoT Tactical instead of Strategic?
According to LexisNexis, “one reason the insurance industry is lagging could be that most carriers think of IoT at a tactical rather than a strategic level. When asked to define IoT, most did so in tactical terms like ‘a network of connected devices.’ Few respondents discussed IoT in terms of strategic uses for underwriting, claims and other analytics.”
The company also cited perceived barriers around “data governance, security concerns, and proprietary … data.”
The real takeaway here isn’t that one particular industry isn’t yet making big use of the Internet of Things, no matter how perfect a fit it may seem. The bigger picture is that this kind of disconnect around IoT is all too common right now across a wide spectrum of industries.
Everyone is “interested” in IoT, but few have any firm idea when or how they’re actually going to implement it or benefit from it.
Going forward it’s time we stop judging IoT by the hype and interest it generates, or even by the number of devices in use. The key now is how are enterprises (and individuals) actually using IoT, and what real-world benefits are they deriving from it.
The LexisNexis study suggests that many insurance organisations may be hanging back, waiting for a more demonstrable set of ROI numbers. Given the overall state of IoT, it is hard to argue with that approach.
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