Are some of your clients looking for life or auto insurance coverage that better reflect their current health status and driving habits? Then you might be interested in offering them products that dynamically price policies using real-time data about them, be they on the road, in the gym or at work.
Such coverage is now available, thanks in no small measure to "the Internet of Things" or IoT: everyday devices — from your smart phone to the home refrigerator — that boast electronics, software, sensors and network connectivity. The new digital technologies are transforming whole industries, insurance and financial services among them.
At an afternoon session of the 9th Annual SNL Insurance Brokerage Summit, held in New York City Nov. 4-5, Accenture Managing Director Martin Spit took stock of the trend and the implications for brokerage firms and their producers. The gathering brought together a cross-section of industry professionals, including, broker and independent agency executives, finance and corporate development people, private equity investors, asset managers and sector analysts, plus those who oversee sales and distribution efforts at insurance carriers.
"Big data and analytics powered by Internet-connected technologies are driving actionable insights across industries," said Spit. "That's allowing companies to develop new and innovative ways to serve customers."
The more connected those customers are, the more ways they can be served. Spit said that by 2020, people will have on average seven Internet-connected devices. And about 8 in 10 consumers, he noted, are willing to share "significantly more data in return for better service or a better price."
In the insurance space, that receptivity has big implications across multiple product lines, including P&C, commercial, and life. A key aim of insurers deploying Internet-connected solutions is risk management: analyzing data to better understand user behavior; and developing programs, incentives or best practices that reduce risk exposure. Upshot: fewer policy claims that can negatively impact an insurer's bottom line.
To illustrate, Spit pointed to a collaboration between A.P. Moller-Maersk Group, owner of one of the world's largest shipping lines, and telecom titan AT&T. In one of the largest deployments of its kind, Maersk is using AT&T Internet of Things (IoT) technology to connect — and thereby track and monitor — 280,000 refrigerated containers holding perishable goods.
Maersk now has near-real time visibility into the conditions of each container in its supply chain. That lets shipping supervisors keep tabs on containers' mechanical performance and ensure their proper functioning.
IoT technology (using the term here in the generic sense) also holds promise in the auto industry. Accenture estimates that about one-third of cars will be digitally connected to insurance products within the next decade. For P&C companies, a whopping $100 to $150 billion in policy premiums could be tied to digitally-enabled insurance applications. In the life insurance space, IoT solutions represent about $50 to $100 billion in premiums that could be dynamically priced based on real-time consumer data.
On the P&C side, Spit pointed to a partnership between BMW UK and Allianz, the agreement focusing on the international rollout of, among other things, car and mobility-related insurance products, driver assistance and safety systems. One goal: to provide customers with competitive and tailor-made policies.
Owners of BMW's electric cars receive seven days of free auto comprehensive coverage, the BMW Car Insurance sold, administered and underwritten by Allianz Insurance plc. During that period, BMW gathers data from its ConnectedDrive or telematics system to assess driving behavior and patterns (though not in respect to hard-cornering, breaking or acceleration).
Drivers are thereafter offered three options:
1) discontinue coverage;
