As the world becomes infused with sensors and everything becomes quantified, industries like insurance are literally being revolutionizing by a combination of Internet of Things and analytics. Here's how to think about the opportunity strategically. From my opening keynote at Insurance IoT in Chicago.

1. Transforming Connected Services
Into Industry-Beating Experiences
Dion Hinchcliffe
@dhinchcliffe
Constellation Research
June 6th, 2016

2. @dhinchcliffeConstellation Research
We Live in Exponential Times
Mobile Traffic through 2020

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Vision: Everything that can be connected will be connected
What will do you with this power?

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Competitive advantage today is about being connected
• The Internet of Things
– Every non-trivial (and many trivial) object is going to be
connected to our networks
– 50 billion objects by 2020
– All your customers
– All their devices and data
– Value moves from periodic engagement to continuous
engagement
– Required deriving insight and analytics
• The Internet of Customers
– Connected relationships in scale
– Through all devices and channels
– Enabled by platforms and applications
• That orchestrate, analyze, and provide insight

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The Motivation for IoT is the Opportunity
• Your organization is connected to all 2.5B connected
people in the world 24 hours a day through their devices
and digital touchpoints
- What will you do with this historic opportunity?
- While there is still first mover advantage
• They generate visible data continuously
- On social media
- From their mobile devices
- From applications
- From everything connected
• This will enable you to make unprecedented insights in
real-time.
• To drive high impact results and create new business
opportunities

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We’ve learned that digitally networked
organizations get outsized benefits
Source: McKinsey Connected Technology Survey (3,000 firms)
25% average
improvement
in organization
outcomes

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As Customer Experience has Emerged as the Top Business Differentiator

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The Risk: Digital is Wiping Out Companies Faster Than Ever

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Internet of Things will run our cities, businesses, and homes
And provide data that will revolutionize the insurance industry

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The Major Types of IoT (And Insurance Vectors)

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Why IoT is different than previous connected strategies
• Total ubiquity
• Standardization has matured
• Protocols and hubs that can
support the numbers of devices
• Far richer sensor data
• Much lower cost floors
• Small and lower power devices
• Will create vast streams of
valuable data 24/7
• Advent of wearables and
embeddables
– Smart everything
– Smart dust

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Network effects still the strategy, but IoT revolutionizes the game
• Network effects have long
become the new ‘digital
marketshare’
• Definition: Anything that has
value the more than other people
have it too
• Value is based on an exponential
growth curve
• Is a force multiplier
– But more importantly a zero sum game
• The Internet of Things is going to
shift the networked value
conversation two orders of
magnitudes to the right

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The Future Belongs to the Network Orchestrators of Devices

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The Golden Rule of Digital Business
“Those who have the data make the rules.”
And IoT will create more data than has ever existed before

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Insurers Must Understand The Power of Digital Ecosystems
As There is a “Winner-Takes-All” Tendency in Digital

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How IoT Will Help Insurers and the Insured: At a Cost

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How to capture the strategic value with IoT

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The (conservative) IoT business case

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IoT is Leading to a Rethinking of Insurance Models

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Partnerships: Getting Up to Speed with Insurance and IoT Quickly

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A Better Model: Investment into IoT Startups in Insurance is Growing

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A Co-Evolution with Consumers: How IoT-based Insurance Will Work

23. Case Examples
of IoT in Insurance
June 6th, 2016

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Case Example: Progressive Snapshot
• Drivers an opt into the program
• Uses a telematics dongle and
machine learning,
• Progressive is able to judge how a
driver is performing on each journey.
• The insurer is able to price more
accurately and manage risk better
• Drivers can save up to 30%

25. @dhinchcliffeConstellation Research
Case Example: Beam Digital
• Provides a smart toothbrush to
every customer
• Monitors their oral health and
uses this information to support
a dental insurance plan
• Sends the customer notices and
encouragement if their brushing
habits are falling short of the
required standard
• Cuts insurance premiums for
customers by up to 25%

26. @dhinchcliffeConstellation Research
Case Study: Erie Insurance
• Erie Insurance employs drones
for property inspections in the
event of a damage claim
• Widely used in the recent
Florida hurricane
• Can do roof inspections in 10-20
minutes vs. an hour for a person
at a fraction of the cost

27. @dhinchcliffeConstellation Research
Insurance with IoT: Conclusion
• There are both significant hurdles and
opportunities for IoT in insurance
• First-mover advantage is still possible
• The window is closing on owning many
classes of insurance data online
• Regulatory barriers
• Customer privacy and security
• Technology maturity
• Digital skills of insurers
• Disruption for slow movers
Challenges Opportunities
• Lower risk and cost
• Additional revenue streams
• New business models
• Digital sustainability

28. Contact
dion@constellationr.com
@dhinchcliffe
June 6th, 2016