The Weekly Wrapup is an analysis of the week's insurance news from the editors of Digital Insurance.

Erie Insurance announced that it is partnering with Roost, a maker of smart-home devices, to deploy the company's water leak- and freeze-detecting items among its customer base. The news follows Roost getting State Auto to sign on with its Home Telematics Consortium last week. State Auto says it gets access to more than 200,000 years worth of data from smarthome devices by doing so; Erie's 10,000 kits will add to that considerably.

This week also saw the launch of a wearable-device initiative by Argo Group, which has been particularly aggressive in leveraging connected devices in its grocery segment. In 2016, a group of insurers and tech companies launched the IoT Insurance Observatory, which analyst firm Novarica signed on with this year. These are only a few of the latest indications that insurers are exploring the Internet of Things as a business-changing development.

McKinsey posits that the future of insurance will revolve around companies' ability to play within ecosystems around the different kinds of risk that it insurers. In the consultancy's view, "The rise of ecosystems involves multiple firms coming together in symbiotic relationships to achieve greater value for themselves than they could capture alone." Other industries have leveraged the Internet of Things to "to offset their disadvantage from a lack of customer touchpoints and engagement."

"Insurers should embrace a similar mind-set to assemble fruitful alliances," McKinsey continues. That means forging more partnerships with Internet of Things-focused insurtechs, like Roost and Gleason Tech, which powers Argo's initiatives. Aviva's global CEO said as much this week, saying that insurance would remain in the "stone age" without more partnerships.

The challenge for insurers now is to use the insights from these partnerships and the new data sources they create to transform the industry, rather than simply make minor enhancements to the existing value chain. In its quarterly insurtech briefing, Willis Towers Watson noted that while more legacy insurers are investing and partnering with insurtechs now, they tend to be focused on enhancing efficiency of existing processes by about a two-to-one margin. However, the kind of changes coming to the market are the kinds incumbents don't often survive, the briefing notes. Venture capital is targeting more transformative technologies -- something carriers need to watch out for.

"Technology revolutions rarely result in redistribution of power among incumbents. Instead, these developments more often produce an entirely new approach to the value chain that defines winners," Willis Towers Watson warns.

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