Smart home and consumer Internet of Things solutions promise significant opportunities for the insurance industry in terms of reducing costs, alleviating risks, deepening customer engagement, and creating new services and revenue streams. There are many barriers ahead to overcome, but given the tremendous upside, insurance companies have begun attacking these challenges with a multi-tiered strategy.
The currency of these opportunities is data, and the level of integration required to realize the insurtech vision and enhance aspects of the insurance business is a huge undertaking. It requires collecting massive amounts of unstructured data from a variety of connected sources. The requirements for substantiating requests and implementing regulatory changes to policies and pricing will the involvement of thousands of homes with active devices, control groups, and multiple sources over a period of years for corroboration.
IT Transformation Coming
Many carriers have been running trials and data-gathering efforts through various partnerships for the past few years, but these have been relatively small-scale efforts. Insurance companies will have to transform their IT infrastructure completely to manage the volume, velocity and variety of big data from the IoT solutions installed in their customers’ homes and cars. Querying that data at scale will require technology capable of handling hundreds of terabytes. Finally, integrating that data into the daily workflows of underwriting, claims, customer service, and product development will require the transformation of all related back-end systems.