How Will Smart Objects Change the Insurance Industry?
Say hello to your fridge. Does it tell you what's inside? Perhaps it compiles a grocery list for you as well. Smart objects are here, and this trend toward intelligent inanimate objects has huge implications for the insurance industry.
What Are Smart Objects?
Smart objects aren't actually intelligent: they just act that way. They can monitor what's going on inside and around them, and they're often connected to the internet, allowing them to upload information. This combination of sensors, data transmission, and data analysis turn an average appliance or other item into a smart object. Smart objects can be simply helpful, such as a fridge that can tell you whether you need to stop at the store to pick up some milk on the way home. However, objects that can monitor themselves and their environment can also become an integral part of home safety and security.
New Realms for Data Analysis
How could more data change the way your company understands risk? For example, if you could track the driving habits and driving speeds attained in a particular vehicle, you'd be better able to understand the risk associated with insuring that specific vehicle. The internet of things offers opportunities to gather, analyze, and integrate data to provide a broader picture for insurance purposes. Insurers will need to investigate, learn, and use new methods to analyze this information.
Opening the Privacy Conversation
For your customers, the internet of things also comes with a host of privacy issues. Customers might feel more secure knowing that they can monitor their home while they're away on vacation. However, they could feel less secure if they knew that health information collected through their web-connected apps could not only be used by physicians trained to monitor them but by insurance companies that provide health insurance. The internet of things brings up privacy issues that will challenge customers and the insurance industry as a whole as we engage in a conversation about the appropriate amount and use of this information.
Insuring Real People in Real Time
The internet of things brings insurance to a much more personal level, and it also brings it into a more immediate time frame. In addition to relying on data averages from history, sensor data will let insurers know what customers are doing in real life, right now. For example, usage-based insurance could transform the auto insurance industry. This insurance is based on the customer's current use of a vehicle rather than the general statistics for a customer of that profile. Similar insurance could emerge in the home protection industry. Using sensors, insurers could tell whether a home had adequate smoke detectors and moisture sensors, and this could give insurers a better understanding of the risks to a home.
When you're looking for an insurance agent association that understands the needs of your small insurance company, look to American Agents Alliance. With networking opportunities, education courses, and our annual insurance convention in Palm Desert— the 2016 American Agents Alliance Convention & Expo, we'll help you stay on top of insurance industry trends.