Google also announced that optical-health insurer VSP will offer subsidized frames and prescription lenses for Google Glass, and Google also said it is developing smart contact lenses that will monitor diabetics' blood-sugar levels in real time.

Another recent acquisition gives Google the capability to offer smart thermostats and smoke alarms with Wi-Fi connectivity, allowing for the management of heating and cooling homes while also providing data on the habits of the devices' users.

Google's recent efforts, combined with its existing search and mapping capabilities, create “a whole new set of opportunities and challenges” for insurers, providing vast amounts of data about individuals, their cars and their homes, SMA says.

SMA adds that Google's rapid advances in technology create a paradox where an insurance industry that traditionally changes slowly meets a world that is changing rapidly.

The briefing emphasizes that insurers must transform and innovate to become early adopters of innovation in order to decrease business risk and ensure competitive advantage.

“No business, regardless of its size, has enough time, resources, money, or relationships to fully capture the potential,” SMA says. “Companies will need to be part of an innovation ecosystem that enables ideation and crowdsourcing to share trends, research, ideas and opportunities that can be operationalized uniquely within their organizations.”

SMA also recommends that insurers look beyond their current business models based on “historical or point-in-time data to a model that embraces real-time data that can offer more relevant and customized products and services.”

Privacy and security

A potential speed bump on the road to this data revolution: privacy and security concerns. Speaking to PC360, Garth, the brief's author, weighs these two risks, stating, “I think about the data breaches that happened with Target and other companies—a lot of this data is very private data, so, in my mind, protection is probably becoming a bigger issue for consumers and presents a market opportunity.”

Concerning privacy, Garth says insurers, like others, must find a balance between the value of available data and making sure privacy is managed at appropriate levels. “In some cases, people are willing to give up privacy,” she notes, pointing to a younger generation that seems willing to share a lot of information. “It's kind of amazing how much they share,” says Garth. “So in some ways it's a cultural thing that customers and insurance companies can benefit from.”

She also points out that users of Facebook and other social-media sites acknowledge that their data can be used and shared, understanding that anything they post becomes public information.

But if consent is not given for certain data to be shared publicly, says Garth, then it brings privacy rights into question. “And I think those privacy rights are trying to catch up in some places,” she adds, noting that the European Union is looking at privacy issues arising from the use of telematics.

Garth points out that when considering what data should be used for underwriting or any other process, companies need to capitalize on the wealth of data in order to innovate new products and services that can add value to customers.

For example, Garth points to the smart thermostats and smoke alarms. Alerting a consumer who is away from home that the furnace is out means that the issue can be addressed before pipes burst, hence eliminating or decreasing the potential for loss, she says.

Ultimately, technology will continue to evolve at a rapid pace. Garth concludes in the SMA brief, “Today, many insurers are accustomed to asking, 'How can technology help run my business?' The insurance leaders of tomorrow will be asking, 'How can technology help reshape my business?'”