4b. P&C Insurance and The IOT - Z. Schmiesing

Verisk Insurance Solutions | ISO AIR Worldwide Xactware
© Verisk Analytics, Inc. All rights reserved.
Insurance and
the Connected World
Zack Schmiesing
May 17, 2016
1

Demystifying the Internet of Things
2

Demystifying IoT: Making sense of the data
3
Technology is changing the way we
live our lives. Analysts estimate
Understanding data from multiple sensors
and how it correlates to future loss is
will be connected to the Internet by 2020.
a moving target that requires
expertise.
Source: Cisco
Identifying sources of data can be difficult when
multiple players are involved, such as hardware
manufacturers, platform owners, etc.
50 billion devices
Variety of devices
Unwieldy and
unstructured
Big data
A complex connected
home ecosystem
insurers could expect over 10MB
of data per household per day.
Depending on the volume,
variety, and velocity of data,
?
Venture capital is available for this market, and
startups pop up daily.
Predicting market leaders

Why IoT?
4
Product,
pricing, and
underwriting
• Segmentation of risk
• Usage-based insurance and telematics
• New products
Claims
• Loss mitigation
• Data-powered claims handling
Distribution
and
marketing
• Value-added services
• Customer interaction/intimacy
• New business development models
• Finding solutions to common Insurance problems

Why IoT?
• Finding Solutions to common insurance problems
• Underwriting
– Proper Classification
– Strategic Segmentation
– Plug the Premium Leakage Hole
– Improve the customer experience: Retention
• Claims impacts
– Data at the point of failure/incident
• FNOL, eCall, quicker response, quicker to close
– Better Claims forensics
– Loss Control opportunities
– Improve the customer experience: Retention
• First true opportunity to redefine
the insurance timeline
– Verify conditions/operations in real time
– Price risk on what’s happened to them, not what’s happened to their peers
– Clearer picture at the point of sale
Better Customer Experience
5

Connected-building/vehicle/cargo/equipment
data usage road map
6
Insurers can work with owners/operators in a phased approach to collect
data at various levels of detail to generate actionable insights.
Verify
Use basic data elements from connected devices to systematically verify
existence of protective devices at point of sale and renewal
Expand
Collect a greater variety of connected data across a variety of providers to
increase segmentation and expand discounts
Predict
Use real-time connected-home data to develop predictive usage-based
insurance models to offer the best price to the best risks

Data possibilities for insurers
7
Usage
• Patterns of energy and water consumption
• Water running when no occupants are home
• Which spaces are used, when, and for how long?
Occupants
• Number of occupants; frequency of access
• Access points and security measures
• Number of connected devices
Contents
• Movement of contents in and out of the house
• Major appliance/machinery location
• Fire/Life safety system detection/status
Structure
• Roof age and condition, material, and weight load
• Wind speed, pressure, weather conditions
• Gas , water leak,, hazardous materials
IoT hardware, platform, service providers are in possession of data that
could be extremely valuable to the insurance industry.

IoT Sub-segments
Connected Vehicles
• Better segmentation;
Pay-how-you-drive (PHYD)
• UBI programs attract better drivers
(or more importantly clearly identify them)
• On-board technology for quicker claims
response; FNOL, eCall,
• Dynamic driving data limits fraud potential
• Big brother, or lower TCO?
8

IoT Sub-segments
Connected Buildings/Properties
• Security, Fire, Life Safety
• Property population, access, peaks and
valleys
• Utilities -> operational fingerprint
• Natural hazards, conditions, hazardous
substances,
• Loss Control practices
9

IoT Sub-segments
Connected Industry
• Utilities -> operational fingerprint
• Machinery, tools, utilization
• Supply Chain: input/output
• Material storage
• Loss Control
10

IoT Sub-segments
Connected People
• Health/Lifestyle monitoring
• Field staff logistics/safety
• Movement/motion
11

IoT Sub-segments
Inland Marine Implications
• Vehicle/cargo/logistics
• Machinery
• Valuables/Equipment
• Technology especially suited
for Inland Marine Insurance
12

Obstacles for Carriers and OEM/TSPs

1) Lack of insight into others’ business model
OEMs make widgets (not insurance products)
– Data requirements
– Underwriting workflow
– Claims workflow
– Regulation and compliance
14

Obstacles for Carriers and OEMs/TSPs
2) Scalability
Direct partnerships
are not scalable
– Contract negotiation
– Data specs
– IT Infrastructure
– Data integration
– Project management
– Relationship management
15
Carriers
OEM/Data
source

3) What Data and How Much?
Example: Connected vehicles generate vast amounts of data
16

4) Security and Privacy Concerns
What types of data transferred
– Highly dependent on industry
– Ideally the OEM/TSP steps up
– The most hazardous risks won’t
likely be of a transactional nature
– Regulation and compliance
17

The Many-to-Many Problem
• The influx of connected structures and devices will
lead to the many-to-many problem for all of us
• Both OEM and insurance industries need to solve for
this to ensure innovation can occur, and occur
quickly
• The solution must be:
– Multi-channel: Gives consumers connected device data
anytime, anywhere
– Multi-use Case: Extends beyond new customer acquisition
– Quick & Scalable: Involves partner with established credibility
with carriers and regulators
– Built in Security/Privacy: Consumer protection

Many-to-many problem
19
OEM/TSP
• Unproven value of insurance industry vertical
• Limited bandwidth to span relationships with
multiple insurers
• Engaged only with a fraction of insurance
industry, leaving much of the market “untapped”
• Cost-prohibitive to create integration with
numerous individual insurers
Insurers:
• Fragmented market — technology winners are TBD
• Data is unfamiliar, unstructured, and inconsistent,
making insight creation difficult, lengthy, and costly
• Inability to systematically validate existence of
technology and audit discount eligibility

Verisk Telematics Data Exchange™
20
OEM/TSP
• Provides forum for mass adoption and
monetization of data across entire insurance
industry
• Provides insurance industry with opportunity for
cost-effective integration
• Increases ease of insurance-discount application,
resulting in increased consumer adoption of tech
Verisk Analytics:
• Brand is an established and well-known insurance
industry leader
• Pioneer and market leader of similar data exchanges
for other products and markets (auto telematics,
public record data, etc.)
• Independent party facilitating data use
Insurers:
• Access to more data from more companies
• Data is provided in normalized, consumable format
for accelerated analysis
• Minimizes the IT costs associated with building several
independent integrations with data partners
• Focus more time on generating insights and less time
on brokering new relationships

21
What’s Next?
Seek broad application of IoT data across
the insurance value chain.
Early adopters will gain competitive advantages
while those “late to the game” will have
difficulty catching up.
Look for opportunities to share data
at scale to take advantage of full
opportunity.
Start with simpler use cases of applied
IoT data and expand business models
over time.
1
2
3
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5 Partner with a “big data” specialist
who is familiar with both industries .

Thank You IMUA
Zack Schmiesing
zschmiesing@verisk.com

4b. P&C Insurance and The IOT - Z. Schmiesing

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