You may have heard about how the billions of devices and sensors now blanketing the globe—from mobile phones to RFID tags—are creating a deluge of data from every conceivable source.

For insurance companies, there are some fascinating applications that could come out of the proliferation of these devices such as enabling smarter policies, more real-time awareness, and more satisfied customers. Consider the potential of “vehicle telematics,” which employ on-board devices mounted in policyholders’ cars that can provide data for incrementally priced, mileage-based insurance. Would you go for a plan where you only paid above and beyond a basic fee when you actually used the car?

I recently heard from Anand Rao, partner with PwC's Diamond Advisory Services, on this and other emerging topics. He points out that this type of approach is still in the pilot stages at insurance companies, and “none have come forward yet published results that have translated to the bottom line.”

But the experiences of OnStar, the mobile tracking and communication service offered in GM vehicles, provide clues to the types of valuable information insurers can glean from mobile sensors. For example, he points out, OnStar tracked more than a million responses to Emergency Service alerts, assisting drivers, first responders and local police departments in many life threatening situations. Add to that more than 146,000 responses to Automatic Crash Notifications where OnStar sent emergency personnel to a vehicle whose driver was unresponsive after an airbag deployment. Not only that, but since the feature debuted in 2007, OnStar has responded to 51,000 requests for Stolen Vehicle Assistance. “That includes providing Law Enforcement the GPS location of a vehicle that’s been reported stolen, or remotely slowing down a stolen vehicle in order to avoid a dangerous high-speed chase,” Rao reports.

However, he notes, consumer privacy concerns present some challenges to implementing telematics technology.

“The primary surrounds the consumer and the laws and regulations that need to be taken into consideration when handling or using vehicle-generated data such as Event Data Recorder laws, which are already on the books in 13 states. “The second issue surrounds the collecting, utilizing and storing driving data at a granular level to support the actuarial process while mitigating consumer privacy concerns,” he adds.

Also compelling is the related “Smart Dust” phenomenon, in which arrays of tiny wireless sensors are networked through environments and can detect and measure a range of conditions, including light, temperature, vibration, magnetism or chemicals. Such devices that actually that may play important roles in flood and fire coverage, Rao says. “Tiny sensors can measure specific physical characteristics such as temperature, humidity etc. and relay that information through wireless technology to a base station.”

Rao observes that field trials are already underway. For example, the ‘smart dust’ program University of California at Berkeley is field-testing the technology to alert forest fires in California, he says. The technology can be employed to monitor and determine the extent of damage from an array of natural and man-made disasters. “The smart sensor devices are sharply dropping in prices from a few hundred dollars to a few cents making the technology more viable,” he adds.

The rise of ubiquitous and mobile computing is creating a range of new innovations, limited only by imaginations and the fine line that must be walked for privacy.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

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