Internet of Things: Reimagining the Future of Insurance
The age of connected technologies is here. We have reached a stage where internet can be leveraged to connect different devices and appliances for a seamless flow of information and data collection. The Internet of Things (IOT) is making disruptive progress across the world, making its impact felt across various industries and business verticals.
According to NASSCOM, the global IOT market is poised to reach USD 328 billion by 2020. India will account for 5% of the global market share with the domestic market growing to USD 15 billion by 2020. The growth trajectory is further strengthened by the Government’s commitment to invest USD 1 billion towards building 100 smart cities every year, for the next 5 years. Investors are also showing a keen interest in start-ups delivering innovative IOT solutions in India. Cumulative investment since 2014 has been over USD 60 million. We already have nearly 120 firms offering solutions in IOT and the future for this segment looks promising.
Other factors contributing to the solid growth of the IOT market are:
- Increasing number of affordable smart devices
- Various touch points to collect data
- Rise in cloud computing
- Growth in data analytics
- The growing customer demand for personalized product and services is also creating a necessity for companies to adopt the Internet of Things to better understand consumer behavior and deliver tailor-made offers
The adoption of IOT is high in healthcare and manufacturing verticals, closely followed by automotive. Today it is also disrupting the traditional insurance models. With real-time data collection and seamless data flow, insurers are now empowered to create finer product segmentations and respond to specific customer needs. For instance, data streams from wearable technology on heart rate, steps walked or sensor-based technology that can measure distance travelled, speed and level of braking – can be used to offer “pay-as-you-live” or “pay-as-you-drive” insurance models. The convergence of various types of data also enables insurers to better assess risk, effectively price policies, and estimate reserves.
AXA has already invested in various IOT projects to be future ready. AXA Drive Coach is a mobile application available for all drivers to help them analyze, understand and improve their driving behavior and style. This tool can significantly raise their awareness of potentially risky driving habits. AXA in France is working on creating a smart home hub by partnering with award-winning connected device manufacturers for better protection against intrusions, fire, floods, gas leaks, pollution, and more.
Health Keeper by AXA is an innovative health service/platform (app + web) launched in Spain in January 2015. Health Keeper users can keep track of all their activities, check their trends, set challenges for themselves, get useful content on health, access a 24/7 medical helpline, and buy medical and well-being services at special rates. IOT is inevitably the way of the future. According to Gartner, there will be 26 billion connected devices by 2020. PwC UK predicts the connected home market to reach USD 149 billion by 2020. Data collected through such connected devices will be a turning point in the way the insurance industry operates. It opens doors for insurers to not just provide customized products but also better protect people through timely alerts on approaching weather hazards, threats to property, health risks or unsafe driving habits.