Only 21% of insurance providers have an Internet of Things strategy in place, according to LexisNexis. Here are five challenges to address.
Building a slide deck, pitch, or presentation? Here are the big takeaways:
- 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
- Only 7% of US insurers said they have the human and technology resources required to use IoT data in decision making. — LexisNexis, 2018
Despite having direct access to Internet of Things (IoT) data, the insurance industry significantly lags behind others when it comes to leveraging that information to improve their business and customer experiences, according to a new report from LexisNexis.
LexisNexis surveyed 480 professionals from top 100 US insurance carriers who work in auto, home, life, and commercial lines. While 70% of respondents agreed that gathering IoT data was important to their organization's current insurance strategy, only 21% had an IoT strategy in place, the report found. Just 7% of insurers said they have the human and technology resources required to use IoT data in decision making.
Further, of the providers that said they collect data from telematics, wearables, and connected homes, just 5% said they use it in their day-to-day analytics.
"Carriers already use data to make better decisions. But given the looming tsunami of data from the Internet of Things, we were surprised to learn how few are prepared to leverage it into their business strategies and customer offerings," Bill Madison, CEO of insurance for LexisNexis Risk Solutions, said in a press release.
Insurers can use data from connected devices to gain insights that help create new business opportunities, tailor product offerings, promote more proactive underwriting and claim resolution, and personalize customer interactions, according to the report. However, most insurance carriers think of IoT as a tactical tool, rather than a strategic one, as few discussed the technology in terms of the benefits it could offer the industry outside of being a network of connected devices.
Some 48% of insurers surveyed said they believe that the ability to collect and use IoT data will define industry leaders. And many are taking a forward-looking approach to the technology, with 36% planning to have dedicated IoT resources three to five years from now, the report found.
In creating an IoT strategy, insurance providers must be prepared to address the following five challenges, according to the report:
2. Data filtering and normalization: The number of IoT devices on the market mean that carriers may receive data in different formats, and will need to learn to synthesize it.
3. Data security: It's no secret that IoT devices cause a number of security risks. Carriers must ensure that data security and customer privacy are built into every process in their organization, including their work with third party vendors.
4. Regulations and compliance: Insurance carriers must ensure that their use of IoT data does not inadvertently lead to discriminatory practices. As we know, artificial intelligence (AI) models are based upon human learning and include human biases that must be avoided.
5. Technology infrastructure: Since many carriers rely on legacy systems, it's key to make sure that their IT platforms can handle the large influx of data that IoT brings, and share insights across the enterprise so that every business unit can benefit.
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