How the Internet of Things Will Transform the Insurance Industry

Tara Kelly, CEO
SPLICE Software

With connected devices being brought into our lives and our homes in waves, according to an Accenture Digital study, the average homeowner is going to be starting new relationships with new companies in the coming years. This sea of change gives businesses a golden opportunity to establish long-term relationships with consumers, just as previous technology transitions – like the move to mobile – have in the past. Companies that dont want to be left behind have to figure out a way to ride the wave by delivering value to consumers. Do you plan to be part of it?

Technology is creating an ecosystem where connection, convenience, personal data and purpose are coming together to improve peoples lives. Insurers who want to be a part of it need to choose the right strategy and the sooner, the better. The potential is enormous now that technology makes it possible for insurers to collaborate with customers and approved vendors to avoid billions in losses while also strengthening customer relationships and building loyalty.

Feb_datapipeBut before insurers can capitalize on the IoTs potential to help them deliver clear value to customers, theyll need to find an effective way to handle an unprecedented flood of data, which is predicted to increase exponentially. They will also have to find a way to connect the dots between data, communication, and desired action.

There is plenty of incentive for companies to do so since up to 70 percent of property damage claims are avoidable, and using new data streams to reduce claims and avoid losses can significantly bolster insurers financial performance. But fresh thinking on how to use technology to manage the data influx and communicate with customers is needed.

There are new platforms and interactive technologies that can help companies act on incoming data, capturing and analyzing information from devices and customers. With a platform that allows companies to apply rules to enable automated decision-making and deploy APIs to trigger communication, insurers can automate many processes while allowing real-time outreach.

smarthomeHow does this work in real life? Imagine a scenario in which an insurer collects incoming data from smart home devices like thermostats, smoke detectors and water sensors and combines it with REST-based APIs and customer data. In this scenario, it would be possible to convey timely, relevant information by phone, text, email or social media.

For example, an insurer might receive data from a water sensor in a customers basement indicating a leak. If the insurance company has accurate, up-to-date contact information from the customer including communication preferences and a list of approved vendors the insurers platform could send a personalized alert and dispatch vendors to investigate.

Success in this scenario is dependent on insurers being proactive on the front-end: They would need to gather customer information and ascertain communication preferences (i.e., phone, email, text and social media) as well as vendor preferences, such as a preferred plumber. Its also incredibly important to obtain permission to contact customers and keep information up to date.

But while that approach requires an investment of time and technology, the benefits are clear and compelling. By addressing the problem quickly, insurers can significantly reduce their exposure for losses. And by taking care of the problem in a personalized way that respects customer preferences, the insurer is building stronger customer relationships.

Just as the internet changed the way businesses operate in a fundamental way a generation ago, and, more recently, the proliferation of mobile devices ushered in a new era of innovation and possibilities, the IoT is poised to change everything. But insurance companies that want to fully capitalize on the opportunity need to be thinking about their strategy now.

By putting a platform in place to enable real-time data processing and APIs to allow the company to translate information into action, companies can cut operating expenses significantly by automating procedures. They can also reduce loss exposure by helping customers address issues like water leaks before they get out of hand.

The same platform that enables processing of incoming IoT data can also help insurers respond proactively to data from other sources. For instance, when a major weather event like a hurricane threatens, companies can contact customers in the affected area with an alert as well as claims information to reassure them that the company stands behind them when needed.

Another essential component of success is to keep customer expectations in mind. As technology evolves and customers adopt new social media platforms and other ways of sending and receiving information, their expectations about communicating with the companies that serve them evolve too. Customers already expect to be able to communicate with businesses across multiple channels and to receive a consistent experience on all platforms. We know that there is no sudden stop in an evolutionary process – customer expectations will continue to evolve as they catch the connected device wave.

The bottom line is that the insurance companies who leverage IoT and smart home data, put APIs in place to make data actionable, and keep customer preferences in mind – at every stage -will be able to decrease risk exposure while increasing customer loyalty. By becoming a part of the ecosystem where connection, convenience, data and purpose improves lives, insurers can add value and succeed in the IoT era.

For more information please visit www.splicesoftware.com

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