Helping insurers to improve service and reduce risk

Lindsay James
Lindsay James
By Lindsay James on 25 August 2016
Helping insurers to improve service and reduce risk

The rise of the internet of things (IoT) is paving the way for a revolution in insurance. According to Jonathan Silverman, director of worldwide insurance industry solutions at Microsoft, the increasing number of connected ‘things’ generate vast amounts of data that hold huge potential for insurance providers and their customers. “Harnessing this anonymous data provides real-time insight as well as opportunities to identify new macro trends and patterns over time,” Silverman says in a recent blog post. “That translates into opportunities to reduce the risk of unexpected machine failure, monitor and manage an individual’s heath more closely, reward good driving behaviours, and more. Insights derived from this data can also lead to lower insurance rates for low-risk assets or discounts for safe drivers.”

Silverman explains that these kinds of IoT-driven innovations are reshaping how insurers do business, enabling carriers to more effectively assess, price and limit risks and develop new products. In addition, they are extending benefits to customers, including shorter response times, more efficient claims processes and personalized insurance policies.

In commercial applications, IoT data from smart, connected products is already improving operational performance, enhancing customer experiences and expanding products and services beyond traditional boundaries. For example, IoT is helping employers prevent injuries and workplace accidents by monitoring employee movements in high-risk areas to warn of potential dangers.

“Companies are also using wearable technologies to help employees take control of their health by documenting their sleep patterns, calorie burn and activity level, which leads to lower rates of absenteeism and higher healthcare cost-savings,” Silverman says.

IoT is helping insurers not only offer tailored products and services. It’s also enabling them to reduce risks for end-customers. “From devices that enhance home security against natural disasters to sensors that monitor water and energy consumption, there are a variety of connected devices in our homes,” says Silverman. “Smart home sensors can detect moisture in a wall from pipe leakage and alert homeowners to issues prior to a pipe burst, saving the insurer from a large claim and the homeowner from property damage and the inconvenience of a major repair.

“In a similar fashion, IoT devices are making usage-based insurance (UBI) possible for car owners—offering discounts or other rewards for responsible behaviour, such as safer driving or consistent maintenance. It’s estimated that by 2020, over 50 million US drivers will try usage-based insurance. Beyond enabling personalised discounts and rewards, insights coming in real time from connected vehicles can even make the claims process speedier and more efficient.”

Silverman points towards Aviva as a case in point. The insurance company based in London, aimed to offer better insurance rates and personalised service for its 43 million customers worldwide. Aviva developed a mobile app that works with a phone’s built-in GPS technology and sensors and the Azure platform to capture driving data. Drivers that used the free app were given a personalised quote after 200 recorded miles.

As connected sensors and devices proliferate in our cars, homes, and everywhere in between, they generate enormous and growing volumes of data. But for that raw IoT data to be valuable, it needs to be transformed into usable insight.

“Cloud-based IoT and analytics solutions, like Azure IoT Suite and Cortana Intelligence Suite, make it possible to gain insights in a scalable, flexible and cost-effective way,” Silverman says. “As an industry leader in IoT, advanced analytics, and cloud, Microsoft brings together the technologies required to derive business value from IoT. These technologies are available in finished solutions, enabling insurers to get IoT projects up and running quickly and start seeing value.

“At Microsoft, we’re seeing first-hand how the use of IoT and analytics to identify, understand and reduce risk is revolutionising the insurance industry. With these technologies, insurance providers have the opportunity to develop more personalised offerings, serve customers more effectively and reduce risk in entirely new ways. And this is just the start—we anticipate even greater innovation yet to come. Stay tuned.”

Read Johnathan Silverman’s full blog post here.

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