Insuranceciooutlook

How can IoT Contribute to Insurance Risk Management?

By Insurance CIO Outlook | Monday, July 27, 2020

IoT-enabled data from devices and sensors can aid risk aversion across the industry verticals, thereby offsetting the number of insurance claims.

FREMONT, CA:

The internet of things (IoT) offers access to real-time, unique, and observable data on an asset’s risk of loss. The data generated through IoT devices are directly actionable for risk pricing as well as mitigation. Further, IoT data can enable the identification of the behavior or actions that are causative factors of risk, thereby allowing the insurance firms to manage risks better. Here are some of the Insurance verticals where IoT can significantly contribute towards risk management efforts. 

Worksite Risk Mitigation

Despite the training programs, safety videos, and on-site safety services, it’s difficult to track the actual behavior of the employees. Wearable sensors enable employers to detect risky worksite behavior and provide on-the-spot feedback to avoid such behavior. Such a system will result in improvements in employee behavior over time. 

IoT technology offers an opportunity for the insurers to gain deep insight over individual behaviors and underwrite those risks accordingly. Moreover, with improvements in risk mitigation and safety management, insurers can see a significant decrease in claims.

Lifestyle Risk Mitigation

The significant rise of workplace wellness programs in the corporate world hints at the massive business value of improved employee health. Insurers are actively participating in employee wellness improvement programs. Wearables are enabling employers and insurers with the insight they require to monitor the adherence of health and wellness programs. Incentivizing employees who adhere to the fitness routines by tracking their progress via wearables is also an effective way to enhance employee health and offer business value to the insurance.

Homeowner’s Risk Mitigation

Water, fire, and burglary related claims are among the most frequent homeowners’ claims. Almost one-third of homeowner’s insurance claims concern water damage such as burst pipe. While fire-related claims are the most expensive homeowners’ insurance claims, accounting for almost one-quarter of total claims costs. IoT-enabled devices enable remote monitoring of the home and remote activation of alarm systems in case of any mishap. Thus, homeowners’ common issues can be addressed with the help of sensors and remote monitoring devices, thereby enabling the insurance firms to pay for fewer claims.

IoT devices and sensors have immense potential for the insurance firms that are eyeing to mitigate risks across its various operational sectors.

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