This document discusses how adopting IoT can enhance insurance business operations. It outlines several ways IoT can impact the insurance industry, such as improving underwriting through access to more accurate customer data from wearables and sensors. IoT also enables better claims processing and loss prevention. However, expanding risk boundaries and gaining consumer adoption of connected devices present challenges to insurers adopting IoT. The objective is to define how new IoT data and technologies could shape innovation, operations, pricing strategies, and risk management in the insurance sector.

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Adoption of IoT to enhance Insurance
Business Operations
Ashwani Kumar 8/5/18 Internet of Things

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Table of Contents
1. Introduction....................................................................................................................................................................2
1.1 IoT & Insurance Background..................................................................................................................................2
1.2 Project Objective....................................................................................................................................................3
2. Literature Review ...........................................................................................................................................................5
2.1 IoT Impacts in Insurance Industry..........................................................................................................................5
2.2 IoT Challenges in Insurance Industry.....................................................................................................................6
3. References ......................................................................................................................................................................7

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1. Introduction
1.1IoT & Insurance Background
Data is the fuel of digital world and giving rise to a new economy. Data lead to valuable insights
which can make a huge difference in society and business. For example, it can improve customer
experience and help strengthen customer relationships.
The Internet of things is the network or system of interrelated computing devices, sensors or other
objects that have unique identifiers and can communicate with other devices on the network.
These objects “Things” are capable of transmitting data. IoT has been widely accepted by
Industries per sector and expected to grow further.
Fig Source EY: Survey by sector reporting companies can use new data sources to boost customer value by 2020.
IoT integration in Insurance industry will allow interactions among several types of devices and
these equipment’s proliferate year-on-year. Most impactful data stream and sources in Insurance
world likely be -
 Wearable or Personal technology - Fitbit / Smartwatches
 Sensor’s on Objects - Commercial & Personal Vehicles
 Location Based Sensors - Alarms, Cameras, Thermostat (Home)
 Geographic Information systems - Satellite based Information
IoT is driving a new era of digital disruption in Insurance market in following sectors –
 Life/Health Insurance - Wearable devices
 Property Insurance - Sensors & Geographic Information Systems
 Motor Insurance - Sensors on Objects
Convergence of different type of data received from IoT platforms will directly increase the
precision in assessing policy holder risk and pricing of product. There is a clear advantage of big
data over current approaches and methodologies used in following sectors of Insurance –
 Product Marketing & Strategy - Customer Segmentation
 Underwriting - Fast process, accurate pricing as per risk
 Claims - Loss prevention & proactive risk mitigation

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1.2Project Objective
IoT was largely viewed as futuristic concept and many insurers adopted an “Wait and See” attitude.
However early adopters confidently would make a difference with compelling value proposition.
IoT offers truly disruptive and transformative potential to Insurance Industry.
70% of US insurance providers said gathering IoT data is important to their organization's
insurance strategy, but only 21% had an IoT strategy in place. — LexisNexis, 2018
Fig: How the Digital Insurance is changing to customer centric approach in 21st
Century
We forecast that there will be nearly $15 trillion in aggregate IoT investment between 2017 and
2025, with survey data showing that companies' plans to invest in IoT solutions are accelerating.
- Business Insider Global IoT Executive Survey 2017
Nevertheless, IoT carries itself a range of fascinating features which can be implemented by insurers
to add the business values. Acceptance of IoT can be viewed from two prospective-
1. Acceptance of additional devices by end insured customers.
2. Acceptance as technology by insurers.
For Insurers, this research can define a way, in which new data & emerging technologies might shape
the business innovation & operations, product & pricing strategies with customer centric approach,
risk management and gain the profit margins by plummeting unexpected cost.
Objectives of study or Research required -
 To explore the challenges and current applications for benefits of IoT.
 To explore the Insurance industry current challenges/ problems.
 To what extent are insurance industries adopting emerging technologies.

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 To research on the factors influencing the adoption of IoT in the Insurance sector to increase
operational efficiency.
Questions still to be addressed –
 What are the factors influencing the adoption of IoT in the Insurance sector to increase the
operational efficiency?
 Are insurance companies equipped enough to create IoT ecosystem?
Expected Outcome of IoT adoption in Insurance Sector –
 Can IoT enhance the customer experience?
 Can IoT develop stronger customer relationship with transparency?

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2. Literature Review
2.1 IoT Impacts in Insurance Industry
IoT is often regarded as the next big industrial revolution after the Internet and making its
presence in Insurance market. Few benefits of this emerging technology as follows-
Underwriting
Traditionally Insurance has relied on agents & brokers with limited data about customers which
even was not correct. IoT expands gateways to accurate data and opening new opportunities for
Insurance business. For example, Wearable gadgets can record the physical activities and Vehicle
sensors can accrue the driving patters which can be further used to decide the pricing (premium).
For customer benefit, offered price may be lower for healthy people and decent drivers. Similarly,
natural disaster patterns and living standard can reduce the property insurance price. Additionally,
by referring the past customer data, Underwriting process turned around time would be faster
with seamless customer experience.
Claims
Sensors, wearable gadgets and digital equipment’s have potential capabilities in loss prevention
and mitigating the risk. For example, Home sensors can monitor the water and fire damage to
prevent the losses entirely. Wearable gadgets can track your vital signs and transmits the data to
doctor. For Motor insurance, Vehicle sensors can monitor the dangerous driving patterns and alert
before hazard. Evidence captured by smart devices can enable the fast response to claim
settlement and personalized services (towing vehicle) offered on the spot by Insurer.
As per Accenture survey, 80% consumers will switch insurers for more personalized services and
41% willing to pay more for those services.
Wellness programs
Wellness program intended to improve and promote health & fitness. For example, Vitality offers
premium discounts, cash rewards, discounted gym memberships, and other incentives once
customer maintains respective status. IoT plays an important role in such Insurance product
features to record the physical activity via wearable products like Fitbit, Smartwatch etc.
Product Innovation
New technologies will drive the industry towards creating product & services with more dynamic
prices. Collected data via IoT will provide an edge to product development with respect to the

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customer segment. It will enable featurization and bundling facility for customers, who carries
diverse risks. Doing so, a balance can be maintained with customer value, marketing and company
profitability.
Usage Based Insurance
Usage-based insurance is a hot cake in market and referred to as ‘pay-per-mile’ or ‘ pay-
as-you-go’ insurance. Telematics measure metrics of driving habits such as driving speed,
miles driven and hard-braking incidents. Installed device in vehicle record the results and
rewards safe drivers or those with low mileage with discounted motor insurance price.
Enhanced Customer Experience
IoT platform and collected data will provide the transparency to both the parties i.e. Insurer &
Insured. Wearable gadgets like Fitness tracker can provide the additional rewards to customer for
strongest relationship and to retain the customer longer. User based Insurance and ‘pay as you go’
is another potential business approach can be used to minimize the premium for customer.
2.2 IoT Challenges in Insurance Industry
Expansion of Enterprise risk boundaries
Traditional insurance business was focused to keep fences around internal operations, data and
systems however with IoT, security may be another concern, which may require additional effort
to secure ecosystem and collected data. Security leaders may have to look in reliable data
protection and storage solutions to protect users’ privacy and sensitive enterprise assets.
Consumer Adoption
Connected devices carrying an additional cost for insurance. Through partnership with device
manufacturers and significant market investment, insurers will quickly become the leading player
in growing the consumer adoption. Insurers have need to create an ecosystem of partners
including smart devices & sensor manufacturers and service providers.
We project that there will be more than 55 billion IoT devices by 2025, up from about 9 billion in
2017. - Business Insider Global IoT Executive Survey 2017

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3. References
https://www.techrepublic.com/article/insurance-industry-lags-behind-in-using-IoT-data-to-boost-
business-value/
https://www.linkedin.com/pulse/IoT-usual-suspects-andrew-dart/
http://asiandatascience.com/wp-content/uploads/2017/12/eBook-Internet-of-Things-IoT-2018-
Market-Statistics-Use-Cases-and-Trends.pdf
https://www.capgemini.com/wp-
content/uploads/2017/07/wearable_devices_and_their_applicability_in_the_life_insurance_indust
ry.pdf
http://www.ey.com/Publication/vwLUAssets/EY_-_The_internet_of_things_in_insurance/$FILE/EY-
the-internet-of-things-in-insurance.pdf
https://www.atkearney.com/documents/10192/5320720/Internet+of+Things+-
+Opportunity+for+Insurers.pdf/4654e400-958a-40d5-bb65-1cc7ae64bc72
https://www.munichre.com/site/marclife-
mobile/get/documents_E2142960612/marclife/assset.marclife/Documents/Publications/MunichRe
US_IoT_FINAL.pdf
http://www.businessinsider.com/the-internet-of-things-2017-report-2018-2-26-1/?IR=T