3 Ways IoT Boosts Insurance Risk Assessment

Insurance CIO Outlook | Friday, December 27, 2019

IoT plays a significant role in standardizing insurance risk management by offering in-depth policyholder data and numerous opportunities to avoid potential risks.

FREMONT, CA: Taking over the traditional methods of identifying risks, the Internet of Things (IoT) introduces advanced risk management solutions for the insurers by giving access to real-time and observable data. This innovative ability allows the insurers to set risk pricing and mitigation. IoT monitors customer behavior, which helps the insurers develop algorithms for behavior-based pricing models for different individuals. IoT offers various benefits to improve risk assessment and pricing. Some of them are listed below.

• Personalized Insurance Services

With the in-depth data of every policyholder and abilities to develop smart algorithms, insurers can customize products, policies, and services while prioritizing the customer’s needs. The real-time IoT data access allows the insurers to understand customer needs and behaviors, thereby letting professionals develop need-based policies. For example- a policyholder’s driving habit can help the insurers to predict risks and offer policies depending on the driving-behavior.

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• Feedback and Engagement

IoT-based monitoring of customer behavior allows insurers to detect and take instant actions on malicious activities and avoid risks. This feature provides feedback in the critical moments, helping the insurers to reinforce safe practices or educate the policyholders about risky behaviors. IoT also helps the insurers offer immediate support to mitigate losses, policyholder safety, and reduce the time of claims settlement.

• Customer Segmentation

Real-time data offers new insights into customer behaviors that insurers can leverage for up-selling and cross-selling. In-depth IoT data lets insurers solve complex questions about customer future needs and ways to attract them for new policies and offerings. Depending on the policy requirements, insurers can initiate specific risk management measures. IoT devices insurers scale the customers’ ability to avoid risks while segmenting them for different policies.

IoT can actively deliver solutions for significant insurance operations. IoT data helps the insurers identify potential risk scenarios, perform real-time actions, and underwrite according to the risk predictions.

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