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Insurance companies have long based their pricing models and strategies on assumptions about the demographics of their customers. Auto insurers, for example, have traditionally charged higher premiums for parents of teenage drivers based on the assumption that members of this demographic are more likely to get into an accident.
But those assumptions are inherently flawed, since they often aren't based on the actual behaviors and characteristics of individual customers. As new IoT technologies increasingly move into the mainstream, insurers are able to collect and analyze data to more accurately price premiums, helping them to protect the assets they insure and enabling more efficient assessment of damages to conserve resources.
A new report from BI Intelligence explains how companies in the auto, health, and home insurance markets are using the data produced by IoT solutions to augment their existing policy pricing models and grow their customer bases. In addition, it examines areas where IoT devices have the potential to open up new insurance segments.
Here are some of the key takeaways:
- The world's largest auto insurers now offer usage-based policies, which price premiums based on vehicle usage data collected directly from the car.
- Large home and commercial property insurers are using drones to inspect damaged properties, which can improve workflow efficiency and reduce their reliance on human labor.
- Health and life insurance firms are offering customers fitness trackers to encourage healthy behavior, and discounts for meeting certain goals.
- Home insurers are offering discounts on smart home devices to current customers, and in some cases, free devices to entice new customers.
In full, the report:
- Forecasts the number of Americans who will have tried usage-based auto insurance by 2021.
- Explains why narrowly tailored wearables could be what's next for the health insurance industry.
- Analyzes the market for potential future insurance products on IoT devices.
- Discusses and analyzes the barriers to consumers opting in to policies that collect their data.
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