The disruptive potential of the Internet of Things is generating a lot of excitement in the insurance industry. I believe two major factors are driving this excitement, inside and outside of the insurance field.
A new partnership with customers
First, IoT is changing the relationship between customers and businesses. For example, right now there’s a lot of focus on using IoT for vehicle insurance, including usage-based insurance and telematics-themed driver behavior. Emerging companies are using smartphone capabilities and applications to measure your acceleration, how you corner the vehicle, how you brake, whether you’re using your phone, etc. All of those data elements are helping people drive better and helping minimize accidents, which benefits both the customer and the insurance companies.
On the homeowner and property side of the insurance market, there’s no shortage of companies coming out with IoT technology for the connected home. There are smart thermostats, Wi-Fi-enabled 9-volt batteries for your smoke detector, water sensors, freeze sensors, humidity sensors, etc. All of these have benefits for both the consumer and the carrier. The insured don’t want to have a loss. Even if you’re covered, you don’t want a flood in your house. It’s a huge inconvenience. And there are great benefits to insurance companies in avoiding losses, as well.
As IoT technology evolves and becomes more mainstream in these areas, what we’re seeing in the insurance field is an evolution of the relationship between carriers and customers. It’s becoming more of a partnership where there are mutual benefits and opportunities for meaningful engagement along the way.
Secondly, IoT is increasing the value of IT to the business. From my perspective, IT has always had a seat at the table, but IoT provides a multitude of new opportunities for IT to serve as a business enabler. As more companies emerge with IoT solutions for the insurance industry, we will have the opportunity to leverage these technologies to make us better.
Telematic and sensor data from vehicles and homes present opportunities to leverage the investments you've already made in big data and extend their value to the business. This gives IT a more prominent role in business discussions and lets IT pull together the building blocks that have been put in place over the last several years. For us, that means a data lake that we built to scale to handle the potential volume from consumer vehicles sending telematics data.
How can CIOs make IoT a reality
My advice for CIOs who want to accelerate their use of IoT technology is to focus on small wins. You may have a big vision and a long-term strategy to get there, but don’t expect to go from zero to 60 overnight. CIOs must have essential building blocks – like analytics, big data, talent, etc. – firmly in place, because otherwise it’s easy to get overwhelmed once you dive into a world of sensor and IoT data.
Once you have the necessary pieces in place, break down the big vision into achievable parts. Not only from a project management perspective, but from a communication perspective. Breaking down the larger vision into smaller pieces makes it more consumable on the business side.
For example, networking with your peers is a great first step toward seeing what’s out there, understanding the technologies coming from startups, and listening to what your competitors and partners are doing with IoT. There are a lot of companies banking on the excitement of the possibilities of IoT, but you may find that you have to talk to five, 10, or 15 before you find the right partner, with a proven track record in your field, to meet your specific needs.
Once you are excited about a solution, find ways to get the business excited, as well. For example, recently I suggested my CEO meet with a vendor that I had screened twice through my IT organization. It was the first time in my six-and-a-half years at Arbella that I ever invited my CEO to meet with a vendor. Although out of character, it was an opportunity for him to be wowed by the capabilities and what’s possible in this area of emerging technology. It was also an opportunity to spark a dialog between IT and the business about the practical applications of the technology within Arbella.
IoT will be a disruptor to all businesses, both in terms of consumer engagement and IT’s role in business outcomes. CIOs must find ways to channel all the excitement around IoT into true business value – before their competitors beat them to the punch.