# IoT: the tech that’s transforming the insurance industry
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2019-09-18
Category: INSURANCE
Category URL: https://financedigest.com/category/insurance
Meta Title: The Impact of IoT on Digital Disruption in Insurance
Meta Description: Discover how IoT is revolutionising the insurance sector, enabling behaviour-based policies, improving customer services, and reshaping insurer-client
URL: https://financedigest.com/iot-the-tech-thats-transforming-the-insurance-industryhtml

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By **Phil Skipper,** Head of Business Development at Vodafone Business

The term ‘digital disruption’ is everywhere and considering the rapid developments in technologies like machine learning, artificial intelligence and IoT, it should come as no surprise.We are talking about a revolution that doesn’t just indicate a change in perspective, but an actual shift in business logic across all industries.

This is particularly true for the [insurance sector,which has much to gain from adopting new technologies](https://www.financedigest.com/modernisation-of-insurance-technology-saves-invaluable-time-and-money.html "Modernisation of insurance technology saves invaluable time and money"). Many players in the field are already using them –in particular IoT – not just to monitor, but also create behaviour-based policies and to re-invent [customer services and redefine the relationship between the insurer](https://www.financedigest.com/customer-engagement-in-the-insurance-sector.html "Customer engagement in the insurance sector") and their clients.

IoT is a data-business and so is insurance

Accurate and timely data that gives a clear understanding of risk, the ability to monitor behavioural patterns and get precise and instant reports in the event of a fault, theft or an accident, are all crucial to a successful [digital insurance](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!") enterprise. IoT is the best [way to achieve that data-clarity and enable the new digital processes that will underpin insurance](https://www.financedigest.com/predictive-analytics-a-new-way-of-insuring-success.html "Predictive analytics: a new way of insuring success") as a connected service.

While it’s true the scale and success of the [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") is often a barrier to change, insurance companies are now realising digitalising their core business processes,and creating a viable roadmap for change, is critical to enable transformation at speed and remain competitive.

As part of this process, [insurance firms also need to consider future](https://www.financedigest.com/insuring-themselves-for-the-future.html "Insuring themselves for the future") technology trends, the change in customer expectations as well as external factors, such as connected mobility and the ecosystem of partners on which these new services will rely. Taking a holistic view of [digital disruption](https://www.financedigest.com/the-road-to-digital-disruption-in-motor-insurance.html "The road to digital disruption in Motor Insurance") helps to assess a firm’s strengths, weaknesses, opportunities, threats and identify where they want to play in a new digital industry.

**IoT adoption in insurance**

The evolution and more wide-scale adoption of IoT provides fertile ground for digital transformation in the [insurance sector](https://www.financedigest.com/whats-driving-consumer-opinion-in-the-insurance-sector.html "What’s driving consumer opinion in the Insurance Sector?"). In fact, according to research from [Vodafone’s IoT Barometer,](https://www.vodafone.com/business/news-and-insights/white-paper/vodafone-iot-barometer-2019) IoT adoption in the insurance industry has already reached 35%.

IoT can [simplify and improve the standard insurance](https://www.financedigest.com/how-artificial-intelligence-is-simplifying-sanctions-screening-for-insurers.html "How Artificial Intelligence is Simplifying Sanctions Screening for Insurers") model, helping speed up claims applications and risk assessments, as well as providing assistance and performing predictions relative to the driver profile. It can also enable entirely new products, like usage-based bike and motor-insurance programmes, and can even be used to encourage better user-behaviour.

Taking all this into account, it’s not surprising 84% of insurance adopters say their core [business strategy](https://www.financedigest.com/foot-orthotic-insoles-market-to-generate-us-5-billion-by-2026-growth-key-business-strategies.html "Foot Orthotic Insoles Market to Generate US$ 5 Billion by 2026 | Growth & Key Business Strategies") has changed because of IoT.

Another interesting aspect to consider is the power digitalisation through IoTis having in drastically changing the relationship between insurance companies and their users.

Historically, [insurance companies were seen as organisations you only got in touch to buy a policy](https://www.financedigest.com/what-type-of-life-insurance-policy-is-right-for-me.html "What Type of Life Insurance Policy Is Right For Me?") or make a claim.Thanks to IoT, many of these operational processes can be automated, dramatically [improving customer](https://www.financedigest.com/how-can-financial-firms-improve-customer-service-after-the-pandemic.html "How Can Financial Firms Improve Customer Service after the Pandemic?") satisfaction.  For instance, detecting or responding faster to accidents, gathering information for a claim, using photographic or video information and reconstructing the sequence of events prior to the incident are all possible using the connected capability, [data and analytics](https://www.financedigest.com/how-the-global-insurance-market-will-keep-pace-with-evolving-risks-through-data-analytics-and-technology.html "How the global insurance market will keep pace with evolving risks, through data, analytics and technology") that comes with IoT. At a time of stress, these capabilities significantly enhance the [customer experience](https://www.financedigest.com/the-next-generation-of-customer-experience-in-banking.html "The next generation of customer experience in banking"), simply the claims process and can drive out cost through automating first notification of loss (FNOL).

However, the change is not just around the more efficient handling of claims.

By connecting to the customer using a black box in the car or via a smart phone or plug-in dongle a new channel through which advice, rewards and additional [services can also be created](https://www.financedigest.com/veritone-launches-marvel-ai-a-complete-end-to-end-voice-as-a-service-solution-to-create-and-monetise-hyper-realistic-synthetic-voice-content-at-commercial-scale.html "Veritone Launches MARVEL.ai, a Complete End-to-End Voice-as-a-Service Solution, to Create and Monetise Hyper-Realistic Synthetic Voice Content at Commercial Scale").These services not only help [manage the risk by encouraging good driving behaviour but can also be used to provide a range of top-up services that increase the value of the relationship between the insurance](https://www.financedigest.com/improving-risk-management-in-the-insurance-industry.html "Improving risk management in the insurance industry") company and the user.

The same approach also extends far beyond motor insurance. Alerting a homeowner to an open window, remotely enabling the alarm, monitoring for water leakage all mean that the business model is shifting from a reactive to a preventive one, drastically [changing the relationship with the customer](https://www.financedigest.com/how-brands-can-adapt-marketing-tactics-to-better-suit-customers-changing-shopping-habits.html "How brands can adapt marketing tactics to better suit customers’ changing shopping habits").

**Improving the future**

IoT [technology is becoming a central element in the digitalisation of many different industries;this is creating new ecosystems of connected services that provide new channels and ways of working](https://www.financedigest.com/what-is-5g-technology-and-how-it-works.html "What is 5G technology and how it works"). With the advent of shared mobility, peer-to-peer car sharing and short-term [property letting](https://www.financedigest.com/property-letting-could-become-a-legal-minefield.html "PROPERTY LETTING COULD BECOME A LEGAL MINEFIELD"), the opportunities for insurance companies to provide consumption-based rather than subscription-based cover increase significantly.

IoT provides the mechanism to [enable and disable access](https://www.financedigest.com/the-open-banking-revolution-enabling-accessible-and-inclusive-finance.html "The open banking revolution – enabling accessible and inclusive finance") to the asset, define the start and end of the period of coverage and even help monitor how the asset is being used. This provides a new way to assess and monitor risk, [providing the basis for micro insurance services](https://www.financedigest.com/tech-amigos-provides-unrivalled-aws-cloud-service-support-for-autorama-groups-leading-brand-vanarama.html "Tech Amigos provides unrivalled AWS cloud service support for Autorama Group’s leading brand, Vanarama").

The [impact of connected insurance services and IoT technology](https://www.financedigest.com/how-can-technology-impact-public-health.html "How can Technology Impact Public Health") also has a wider societal benefit, paving the way for smarter, more efficient cities. In the short-term, the data produced can improve traffic checks and routing, monitoring emission and ultimately help make streets safer. In the long-term, the same data can contribute to the development of [smart integrated transport, smart cities](https://www.financedigest.com/smart-city-kiosk-market-to-reap-excessive-revenues-by-2028-trends-and-forecast-by-fact-mr-investigated-in-the-latest-research.html "Smart City Kiosk Market To Reap Excessive Revenues By 2028 | Trends And Forecast By Fact.MR investigated in the latest research") and support the shift towards a smarter, safer, and cheaper future for people all over the world

**The role of IoT in the [digital transformation of insurance](https://www.financedigest.com/insuring-a-seamless-digital-transformation.html "Insuring a seamless digital transformation")**

The great amount of data IoT offers [insurers access to is the key to their future](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide") growth. Those who can leverage this [data and look at implementing analytics](https://www.financedigest.com/top-5-data-analytics-trends-for-2023.html "Top 5 Data Analytics Trends for 2023") and machine learning tools that rely on it can realise significant operational benefits, but those that use the data to transform can achieve wider long-term advantages.

By [providing an accurately measured risk environment based on actual data](https://www.financedigest.com/comparative-analysis-of-the-best-data-room-providers.html "Comparative Analysis of the Best Data Room Providers") and behaviour, digitalising with IoT also creates the opportunity to re-invent how insurance is considered and perceived by customers. By using IoT technology, insurers can offer more bespoke tailored products,when customers want them, in a [way that is easy to consume](https://www.financedigest.com/the-future-of-retail-and-the-ways-that-retail-has-changed-for-consumers-during-the-pandemic.html "The future of retail and the ways that retail has changed for consumers during the pandemic").

[Digital insurance](https://www.financedigest.com/digital-insurance-and-the-remote-working-and-studying-boom.html "Digital insurance and the remote working and studying boom"), whether for motor, home, health or travel is already enabled through IoT. It’s therefore essential leaders in the sector recognise its power and keep exploring the [opportunities it has to offer](https://www.financedigest.com/surgical-equipment-market-high-trend-opportunities-offers-future-business-growth-by-2030.html "Surgical Equipment Market High Trend Opportunities Offers Future Business Growth by 2030").


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