Forget autonomous cars. Would you believe a future of self-flying cars is becoming a reality faster than any of us at Propelics could have imagined? Computers already control pretty much everything. Driverless cars created by major auto manufacturers are already driving among us in test-runs. And for a while now pilotless planes have been used for surveillance and data capture. But this is just the tip of the iceberg. The IoT and autonomous cars are disrupting the insurance industry as more companies strive to gain competitive edge by exploring technology innovation to offer still better services and products.
Over 6 billion devices are already connected and over 5 million new ones are being connected everyday. The ability to capture and share real-time data is generating game changing opportunities for organizations that harness the information to create new products and make better decisions around risk assessment and loss mitigation.
So how are the IoT and driverless vehicles disrupting the insurance industry? One word: “interaction.”
The IoT is already causing insurers to change how they interact with customers and partners. In the past, insurers offered the same products to everyone. But today’s companies have the huge advantage of being able to tailor products and services based on real-time data about their customers’ driving behaviors, hygiene and health.
Companies like Progressive and State Farm have been leading the charge using telematics to gather information about customer driving behaviors, allowing insurers to drive premium growth, decrease loss ratios and increase margins. As a result, customers who drive responsibly benefit by lower premiums.
According to Chetan Sharma Consulting, internet-connected vehicles have become the fastest growing segment of the wireless industry in the US, adding more links in 2016 than smartphones and tablets combined. With the majority of the new vehicles being manufactured with computer dashboards and connected apps, cars today are able to receive alerts like approaching weather, allowing us to avoid potential damage. Naturally this also benefits the insurer by avoiding a possible claim.
Most significantly, the adoption of IoT technology is beginning to expand from personal lines of insurance to commercial. Businesses are leveraging IoT in offices, and in distribution and warehouse facilities for security and to provide predictive alerts to avoid potentially dangerous situations. Insurers issue policies based on risk analysis and improve loss ratios based on the data captured from the IoT.
These are just a few ways the IoT is disrupting the insurance industry. Now let’s look at driverless vehicles and explore how they are also likely to disrupt insurers.
Several companies are testing driverless vehicles in the market (e.g. Uber is busy testing today in Pittsburg). Insurers must realize the number of autonomous vehicles on the roads will increase sooner than anyone expected. But what of all the challenges that automakers, insurers and consumers must overcome? One of which is the ability to switch between autonomous driving and being able to take control of the wheel when needed.
We have already become too reliant on back-up cameras and sensors. Don’t believe me? Recent studies from the National Highway Traffic Safety Administration and Edmunds have shown that drivers put into vehicles that lack a back-up camera and sensors tend to become unsure of themselves and make mistakes because their reflexes and instincts are no longer sharp.
To remain current, insurers must reevaluate how they insure vehicles and drivers, especially when determining liability coverage. If a driverless vehicle is in an accident, but the driver could have prevented it by taking control of the vehicle, who is at fault?
I’ve talked about how the IoT and driverless vehicles are impacting insurers and their customers—allowing for tailored services and products, lower premiums, better risk assessment, etc. But the bigger disruption these technologies are creating is to the insurer organization itself.
The ability to harness all this customer data is today forcing insurers to address how and where they are going to store it all. Furthermore, how are insurers going to analyze all this data to generate value?
Insurers now must think about reengineering business processes, expanding their internal skills in analytics and business analysis in order to successfully understand the data captured, and start making investments to digitally transform the way they do business and interact with customers today.
If you’d like to discuss the rise of Bots (or any other emerging technology) with a Propelics strategist, please check out our Emerging Technologies Kickstart to get started. In the meantime, keep executing on your enterprise mobile strategies!
Sr. Strategist & Client Partner Manager