As the Internet of Things (IoT) becomes more and more prevalent in the daily lives of consumers, the insurance industry is figuring out ways to access the wealth of data that connected devices produce, and use this data for insurance purposes. From auto insurers, to home insurers, to health insurers, IoT offers a range of possibilities for lowering premiums and raising revenues. NewtonX spoke with the heads of innovation, technology, and IoT at 15 of the top biggest insurers in the U.S. to determine the partnerships and processes that insurers are leveraging IoT for.
The Big Three: How Insurers Are Using IoT in Health, Auto, and Home Insurance
The three biggest markets for IoT are auto insurance, health insurance and home insurance. Each of these areas already has a range of consumer-facing IoT devices on the market — making partnerships and incentive programs easier to implement for insurance titans.
1. Auto Insurance Through SmartPhones and Connected Vehicles
Drivers and their cars are increasingly equipped with sensors that not only collect data on driving behavior, but also monitor vehicle data. This data can include oil temperature, wear and tear on brakes, and tire pressure. Together with data on driving behavior these data can form the basis for new insurance models that contribute to active and passive safety.
For insurers, this will likely lower premiums for the majority of drivers. In order to offset this decrease in revenue, companies will need to establish partnerships with repair shops and service add-ons. Additionally, insurers will likely invest in AI-powered fraud detection systems as a means of increasing revenue to offset lower premiums.
Multiple insurers have already begun making these shifts. Progressive, for example, partnered with Zubie, a connected car tracking system for insurers, as well as with TrueMotion, a mobile telematics company.
2. Health Insurance Through Connected Devices and Wearables
The health insurance industry has one of the richest opportunities to capitalize on the proliferation of IoT devices. Oscar Healthcare, for instance, uses Apple Health to track users’ steps via their iPhones, and gives $1 a day in Amazon gift cards for everyday that users meet their step goals. This system encourages preventative care — users who exercise daily are less likely to use the full extent of what their policy has to offer, thereby costing the insurance company less.
Similarly, Samsung partnered with United Healthcare and Qualcomm Life to offer Samsung Gear Fit2 Pro and Samsung Gear Sport for a wellness program that offers rewards for up to $1,000 per year to users who meet their fitness goals. Apple and Aetna Insurance have also teamed up to offer a new app called Attain, where users can earn an Apple Watch through healthy behaviors.
Other insurers have gotten even more creative: Beam Dental insurance, for instance, gives all members a smart toothbrush and offers Smart Premiums based on data that the toothbrush collects.
3. Home Insurance Through IoT Partnerships
Many home insurers have begun cooperation models, selling integrated products via smart home consumer devices. Allianz, for instance, is one of several companies that partnered with Nest Protect, a smoke and carbon monoxide alarm that sends phone alerts about danger pinpoints the root of any smoke or carbon monoxide.
Similarly, Liberty Mutual offers protective device discounts for homeowners who equip their houses with smart devices including smoke alarms, door locks, burglar alarms, fire extinguishers, and sprinklers. Like the health insurance model described above, this approach lowers the likelihood of a client surpassing their deductible and costing the insurance company.
The Future of IoT Insurance is Preventative
Even with lower premiums, insurance companies that can successfully leverage preventative strategies will end up increasing revenue. For now, this will be the primary use case that we see for IoT in insurance. Whether it’s earning points or dynamic premiums, insurance companies will incentivize customers to act in ways that lower the likelihood of them reaching their deductibles — thereby giving cost savings to customers and providers.