Insurance companies love collecting data on their clients. The Internet of Things loves gathering data through every smart device. A match made in tech heaven? That's what ROC-Connect thinks: It's partnering with CoreLogic in order to help insurers bring IoT devices to market.
The impact could be huge: The Boston Consultancy Group has estimated that U.S. insurers could reduce annual claims in their nearly $10Bn-a-year industry by 40 to 60 percent, just with the real-time data smart devices could provide.
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As CES continues, I chatted with ROC-Connect’s senior vice president, Kevin Meagher, about the company's presence at the event and their plans at the intersection of insurance and IoT. Here's the Q&A.
How does your company help insurers?
We help insurers by giving them a better way to assess risk.
Historically, the traditional building blocks for assessing risk have been simple. Insurers use information about the customer (credit risk, history of claims, etc), their property (type, size, cost of rebuild), and the location (weather, local hazards, etc). In the future, mixing this with IoT data will give much deeper insights. Data from devices in the home, information on the services customers use, and insights into personal behavior, will all help insurers make smarter decisions and to develop better business models.
The existing consumer business models have significant limitations in a digital age. […] Savings are offered for having security systems and fire sensors even though more than half the customers never switch their alarms on and the fire sensor batteries are flat!
[…] The biggest losses for insurance company relate to fire and flood where they typically pay out about $9 billion a year in claims. Placing simple leak detectors that sense both temperature and water to provide early warning of the leak can, as stated above, significantly reduce losses. Similarly, a connected fire sensor will improve safety and reduce response times.
Consumers will benefit from instant alerts and in some cases, links to emergency response services. Insurance companies will benefit because for the first time, they will have data that shows that the devices are fitted and functional in the consumers home. We will move from the crazy position we are in today where insurance companies are offering discounts on security systems and fire sensors when 50 percent of customers do not switch the alarm on and there are no batteries in the fire sensor.
How does it help consumers?
Insurance companies will be able to move from simply mitigating risk to being proactive by helping consumers to protect all matters most and by delivering more value with the policies. Consumers will be offered simple, affordable, and scalable smart home solutions at much more competitive price points as possible wider bundle with their insurance policies.
Moreover, when things go wrong insurance companies will be able to offer support and assistance. In addition, consumers will see more competitive pricing and discounts. The IOT and Smart home will reduce claims and much of this will get passed to consumers. In addition, insurance companies will start to bundle more services with their policies so, for example, in the event of a problem, they will partner companies like HomeAdvisor to provide support services.
What's your presence at CES?
We have suites at the Palazzo Hotel where we will be demonstrating the various products and services we offer. In particular, we will be showcasing the work we’re doing with CoreLogic to offer insurance companies turnkey solutions for the smart.
What do you see happening in the future of IoT insurance?
The IOT is going to be a game changer for the insurance industry. For the reasons explained above, they can use data from devices to mitigate risk and engage consumers. Consequently they will move away from the traditional risk model to develop true digital strategies and bundle more services. Some of these services will provide new revenue streams and take insurance companies well beyond their traditional service boundaries.
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