IoT: Insuring the insurance industry
By Mayank Bathwal
The Internet of Things (IoT), through its disruptive capabilities, has managed to play a transformational role across industries. It has become imperative for organizations, irrespective of the sectors, to explore new avenues where the potential of IoT can be harnessed from a business perspective. In India, the insurance sector, once considered a laggard in technology adoption, is today shedding this image by adopting disruptive and emerging technologies across various lines of operations. Over the last few years, considerable investments have been made by the industry on IT tools such as Big Data, analytics, and chatbots to address a gamut of business challenges that include combating fraudulent claims, designing personalized policies, improving insurance persistency, enhancing customer experience and so on.
It is forecasted that between 2015 and 2025, the insurance industry will experience another 10x productivity change. As customer understanding of risks is changing dramatically, it is time to make insurance intelligent, inclusive and dynamic. However, given the competitive nature of the industry, there is a need to develop intelligence to transform the insurance industry from being remedial to being preventive.
Nowadays, sensor-based wearables and IoT-based devices, are altering consumer behavior. Additionally, customers, especially the young and tech savvy ones, highly value digital engagements with insurers. Such trends make it imperative for insurance companies to offer digital-based personalized and compelling offerings. According to the recent Capgemini and Efma’s World Insurance report 2017, the young and tech-savvy customers represent important segments in terms of incremental revenue potential; however, these segments are also more vulnerable to attrition. Moreover, it has been observed that as the proportion of these segments the young and tech-savvy customers continue to rise, their preferences will gradually become mainstream. As a result, it is necessary that insurers cater to the young and tech-savvy’s clear preference for the digital medium thereby ensuring they continue to build and maintain relationships with them these customers.
For instance, health insurance companies can help customers to maintain a healthy lifestyle by monitoring and analysing the data streams from their wearable devices such as fitness bands and tracking fitness activities of customers at partner gyms where IoT sensors are deployed. All the information collected from these data streams can be analysed to understand the customer’s fitness regime and accordingly they can be recommend the requisite diet and exercise they need to follow to ensure they achieve their fitness goals. Additionally, to make sure customers follow the suggestions made to them, they could be incentivized by offering lower insurance premiums or reward points, which can be redeemed at partner’s outlets for health and wellness expenses.
Leveraging IoT to move towards preventive healthcare is just one of the first step insurers have taken to make this technology integral to their processes. Other areas where IoT can make a positive impact are underwriting, claims management, on-boarding, and product pricing. The intelligence gathered through IoT can give insurers deeper insights into their customers’ behavioral patterns and risks which can be used to improve all these aspects. Consider, claims management or customer on-boarding, in either case insurance must make the process both quick and hassle-free. This can only be made possible if insurers have the vital information at their disposal which helps them to swiftly detect fraud or design personalized offerings.
The bar in customer services is not set by other insurance companies, but by other experiences customers have in their daily interaction with the Amazons or Ubers of the world. Competition comes from all directions and as many products become commoditized, Indian insurers need to realize that they have to differentiate them through compelling customer experiences. So, it is apparent that as the role of IoT in the insurance space continues to grow, health insurers will harness its transformative potential to ensure the health of both their businesses and customers are in good shape!
The author is the Chief Executive Officer, Aditya Birla Health Insurance
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