The Internet of Things has the potential to revolutionize the insurance industry, given the vast amount of real-time data that could soon be available to support underwriting, pricing, and claims management decisions. Yet that doesn't mean implementing and monetizing this tremendous opportunity will be easy or without significant challenges for carriers.
Insurers live and breathe data. Most of what they gather now is already experiential, such as claims history, or whether loss control elements are in place. But a lot of it is correlational, such as type of industry or property involved, geographic location, credit history, and age.
Insurers have done a pretty good job serving consumers and making a living with these traditional data sources. However, the emerging Internet of Things (IoT) can theoretically take data collection and predictive analytics to new levels of granularity by providing real-time information about the status of people, property, and equipment via Web-connected sensors. Whether that translates into increased relevance and improved profitability depends on what insurers can do with such raw data.
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