IoT = Insurance of Tomorrow?

In October 2017, Initio was invited to participate as speaker to the Insurance Breakfast organized by Comarch in Brussels & Luxembourg.

For this event, we held a keynote about Connected Objects usage in Insurance. This is the synthetic resume and the slides of our presentation.

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Even if you don’t work in Insurance industry, you can’t ignore that the potential impact of connected objects on Insurance is a major trending topic since years now.

In Belgium and in Europe, numerous insurance company has already started at least one test of insurance product backed by connected device. In most cases it’s about installing a connected device in car to monitor driving habits of young drivers.

According to the cases, collected data may serves a risk prevention program or a premium discount system for good drivers.

You can found exactly the same model applied to connected houses; when a “smart” smoke or leak detector is combined with Home insurance coverage.

Less frequent, mainly due to privacy concerns, the connected health insurance who is relying on remote health monitoring system and fitness training program.

A world of opportunities…

The claimed advantages for integrating Connected Objects into insurance products are numerous:

More frequent touchpoint and interactions with customers:

No more necessary to wait a contract renewal or a claim to engage customers. With connected objects, the use is generating the contact opportunity.

Deep customer intimacy and « a la carte » coverage

Thanks to connected devices, behavioral data can be collected in real time and with a high level of accuracy. This allow to go far beyond a model like “pay when you drive” and allow to forecast the “pas How you drive” model where not all kilometers traveled are insured at the same price depending of the driving style off course, but also of weather, the geolocalization, road conditions etc. 

Prevention and Risk control

Before faster damage detection and claim management, real time monitoring allows real time monitoring and prevention. As it is cheaper to avoid a damage than to compensate for it, Insurers haves the opportunity to transform themselves in everyday (prevention) coach thank to IoT and related mobile applications.

Extended services and new incomes sources.

Touchpoints multiplication and personalized services need to be feed by varied, relevant and convenient commercial or marketing actions. Insurance company will have to expand their service offering, by developing new products and services (core business activities) but also by forging shared ecosystems with third party services providers (non core business activities). 

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… If you meet the 5 conditions for success.

Despite numerous and obvious benefits, the integration of connected objects into insurance contracts and business model is still relatively anecdotic and the reason is certainly not technologic.

To be a success and a real game changers, the connected insurance of tomorrow need to successfully master 5 drivers who are heading to different (and sometime opposites) directions.

1)      A Strict Data security and privacy enforcement.

·         Legal framework (GDPR) need to be strictly respected and customers must be clearly informed about the use that will be made of their personal data. Privacy concerns must be addressed with open and transparent communication.

2)      An approach based on customers benefits

·         In contrary to others digital interfaces like mobile apps, customers are not on demand for IoT in insurance. Barriers to adoption are high and they will remain strong until customers will perceives immediate and tangible benefits in their daily live.

3)      A Customer Centric relationship

·         The new client-insurer relationship need to be based on the whole customer lifecycle and no more only on the tree classical touchpoints: Contract management, premium payment and claim management. Insurers need to walk with their customers all along their daily expectations. Prevention and convenience needs to be cornerstones of the Insurer of Tomorrow.

4)      A New business model

·         Traditional insurance services are rarely designed for new usages. They need to be rethink in order to meet new way of contracting, to be managed online or to be compatible with on-demand activation, sliced pricing or hyper personalization.

·         Distribution channels needs to evolve also, direct sales will be hard to avoid, like market places and white labeling distribution.

5)      A Data driven (open) ecosystem

·         Data are and will remain the most valuable asset of insurance company but the full potential of this asset will be reached only if data are injected into a living ecosystem where they will be sold, purchased, shared and enriched by partners, data-brokers, social media, CRM systems etc. The Insurance of Tomorrow will be embedded in a landscape of Owned, Paid, Earned and Shared data source

About the Authors / Speakers

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Geoffrey Laloux,

Manager of the Business Line “Innovation & Digital Transformation”.

17 years of experience in digital transformation, from the Telecoms industry to the financial sector through European institutions, always with a focus on innovation and customer centricity.

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Perle Nguyen,

Senior Consultant, Insurance.

Evolving in Banking & Insurance industries for more than 11 years, taking part in projects related to CRM and Mobile App. 

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Geoffrey Rolin,

Senior Consultant, Digital Insurance

Since more than 9 years active in the Insurance & Banking sector in Belgium, from corporate strategy to implementation of digitalization of sales & services flows.