The Internet of Things and other sources of Big Data are set to transform the industry as we know it. But whose data is it anyway and will consumers be willing to share?
The insurance industry – like many other sectors – is on the cusp of significant change as the Internet of Things (IoT) and improved analytics offer the chance to gather new datasets.
From the connected car and home to wearable devices, there is potential to offer a more tailored product.
Sources of so-called Big Data are growing exponentially. By 2020, there will be around 26-30 billion devices wirelessly connected to the internet (compared with five billion at the end of 2015), according to technology consultants Gartner and ABI research.
By embedding sensors in cars and homes and monitoring behaviour, insurers will be able to assess everything from how well a person drives to whether they set the burglar alarm when they leave home and how often they go to the gym.
Premiums will reflect this behaviour, with discounts offered for responsible driving and healthy living, for example.
The expectation is that cars with autonomous features such as automatic braking will have fewer crashes and smart homes will alert absent owners in the event of a leak or fire.
UK insurers’ use of third-party data for analytics is expected to grow significantly, according to research by Verisk Insurance Solutions and solution provider Earnix.
Half of the respondents to its survey of UK carriers and brokers anticipate the number of external data sources used by the companies will grow three to five times over the next three years, while 35% more believe it will double in the same period.
Some telematics offerings, for example, are being enriched with meteorological information so that driving behaviour can be assessed relative to road and weather conditions.
In Japan, Tokio Marine & Nichido Fire Insurance is conducting a trial using an app and thermometer to monitor womens’ temperatures over their monthly cycle looking for early signs of ovarian cancer.
“Some of the emerging data types expected to see high use growth over the next three years include social media, building permit, third-party telematics, and shopping behaviour,” said Verisk Insurance Solutions senior vice-president of insurance and analytics David Cummings.
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