Insurance's Golden Opportunity for IoT Leadership
A new survey of 675 application developers finds that the Internet of Things is not an amorphous term, but a lean, mean, revenue-producing machine. At least 65 percent of Internet of Things (IoT) apps in production today are generating real revenue. The study, conducted by Harbor Research and underwritten by Progress, also finds developers expect this figure to rise to 80 percent by 2018.
The industries that currently lead in IoT development include smart homes, wearables, automotive and sports/fitness.
There are a range of implications for the insurance industry. Smart homes will help shape P&C offerings and premiums, while wearables may percolate through the health insurance sector. Already, telematics is in widespread use, and is changing the pricing model for the entire industry. Yet half of the developers in the survey feel they either don’t have the technology or the skills to effectively deploy IoT-aware systems.
The Progress report draws the following conclusions:IoT will have a broad impact across all venues: Healthcare, retail/commercial, facilities and security, transportation, consumer and professional IT and communications, resources, energy and manufacturing. It’s important to note that all these venues touch the insurance industry in one form or another.
IoT will require new software tools and interoperability: “To date, the IoT opportunity has consisted of simple monitoring applications and related tracking/location services,” the report states. “The biggest challenge IoT faces is the enablement of seamless interoperability between each connection.”
Device data management systems need to mature rapidly: “A new generation of data services will be required to meet data volume, velocity, complexity and overall management challenges, providing real-time analytics, closed-loop control, and local systems collaboration.”
Need for architecture that will drive data aggregation, usage and management: “Data management and information management models are required for this market opportunity to flourish. Systems need to be designed to accommodate and provide interoperability between existing machine-to-machine systems, different device manufacturers, and pre-existing service providers.”
Driveway Software’s Jake Diner recently issued a challenge to the industry to move rapidly to usage-based insurance (UBI) to more effectively compete and deliver value to customers. He cites a Strategy Meets Action study that estimates “nearly a quarter of insurers are in some phase of IoT deployment. Broad-scale IoT deployment such as UBI and other telematics solutions imply limitations to premium growth as discounts proliferate.”
Of course, moving to a UBI or IoT-based world isn’t just about putting a bunch of smart devices out in the world. There’s a considerable amount of development and integration work needed back at corporate to make it all work. Data security and privacy, interoperable standards, along with data integration and management all need to be understood and wrapped into all initiatives.
For example, the Progress report authors point out, “without a single set of standards in IoT or a clear winner among OS or platforms, developers will continue to require flexible technologies that allow to develop once/ deploy everywhere, and that can integrate and operate with other related applications.” The fragmentation seen across IoT will require “new methods of software development that are flexible and allow rapid development and easy integration with a variety of other platforms.”