- Insurance companies will significantly increase their use of IoT devices over the next five years by offering new IoT device-based insurance policies to customers and incorporating the IoT into business practices. 74% of insurance executives plan to invest in the IoT by 2016, with 7% of insurance executives planning to spend significant sums, according to an SMA Research survey.
- IoT-enabled usage-based insurance (UBI) models are becoming increasingly popular. Auto, health, and life insurance companies are tracking their clients' habits using IoT devices and offering discounts or rewards for healthy and safe behavior.
- Auto insurers are the leading adopters of UBI models. By 2020, 56 million US drivers will have tried UBI, up from 17 million this year, according to our estimates.
- Healthcare insurers are giving customers free fitness trackers and offering lower premiums or other benefits for meeting daily exercise goals. A new startup has even brought the UBI concept to dental insurance.
- The IoT is also helping insurers reduce risk and mitigate costs in other ways.
- Home insurance companies are incentivizing customers to install connected devices that warn of potential danger to properties.
- Car insurers are seeing costs savings from connected car adoption. We estimate that US insurance companies will save $21 billion in 2020 as a result of crashes mitigated by connected vehicle technology.
- IoT-based analytics can be used to predict future events, such as major weather patterns. This can help insurers better price policies and prepare customers for upcoming incidents, which should help reduce damages.
- Property insurance companies are increasingly using drones to assess damages after an incident has occurred. Consulting firm Cognizant estimates that drones will make insurance adjusters' work flow 40%-50% more efficient.
Insurance companies across a number of sectors are beginning to leverage the IoT in a few different ways — they're providing their customers with devices that can be used to monitor behavior and reduce premiums, using IoT devices to assess damages after an incident has occurred, and monitoring analytics around future events like weather patterns to warn customers of upcoming dangers and better anticipate future payout.
- 74% of insurance executives plan to invest in the IoT by 2016, according to an SMA Research survey.
- 7% of insurance executives plan significant spending.
In this report, we analyze how different types of insurance companies are leveraging IoT devices as well [...]