Ushering of “Internet of Things”
Everyone is fascinated by the idea of smart homes and vehicles. The Internet of Things is made up of billions of devices connected to the internet. IoT has numerous advantages. Automation, cost-effectiveness, the need for less productivity, and so on. However, is this safe and protected? It is well known that the Internet of Things (IoT) has some security flaws. Are you still willing to go to an era where everything is connected? This will be a narrative, but it may feel strange, give you goosebumps, and make you reconsider going to the ‘IoT Era.’
By the end of 2023, there will be 64 billion connected devices. By 2035, the Smart City promise will be discovered, but the question is, “Will it be beneficial to us?” or “Will it be advantageous to them?”
The city’s operating systems will gather a massive amount of data, termed “Big Data.” These billion connected devices act as a hub for data collection. Our daily routine is recorded and mapped by these devices. When IoT first became popular, it was thought that hackers could take control of the central and grid servers with just a few hundred lines. But it doesn’t have to be in this way. The devices are well-coordinated and secure. “How is it unsafe?” is the main question. Daniel Elizalde (a top thought leader in IoT Product Management) described some business models used by major corporations in an article.
Unmeasured Risk of Internet Of Things
Business Models
Monetize Your IoT Data
From a business perspective, the amount of data collected by the Internet of Things determines its worth. What is the benefit to them from this?
We’re all aware of how Facebook and Instagram monetize their platforms through advertisements. They gather a lot of information about us (through cookies) and show us advertising for products we’re interested in. These advertisements by third-party companies provide value to social media, and these third-party companies receive real value when you are influenced to use their products.
IoT follows the same philosophy.
IoT follows the same business model. You can design your product to provide value to the end-user while also gathering valuable data that you can sell to a third party. This way, you may give your IoT device away for free, avoiding end-user consumer conflict. The purpose is to collect data from as many users as possible. You want to start a cascade. Your data suggestions will be more appealing to third parties if you have several devices out there.
Numerous products make use of the IoT business model. Consider installing energy-saving devices in buildings to track their usage. This data benefits property management, but utilities or other aggregators may have to spend a significant sum to receive aggregated data from thousands of properties.
Insurers using data
There is really no such thing as ‘bad’ risk; it is all about pricing accurately. So, with a deep understanding of the portfolio, insurers can price appropriately depending on the level of risk. — Mark Phillips, Head of Sales at Concirrus.
By utilizing data-driven underwriting, the Internet of Things has the potential to significantly lower purchase and policy administration costs. To gain the full benefits of the Internet of Things, companies must shift from old business models to an efficient business strategy that incorporates data from this technology — designing policies with risk coverage commensurate to the insured person’s liabilities.
New business models based on data from smart devices can help enhance operational efficiency, product price precision, and fraud protection. It will eventually assist insurers in becoming strategic partners that can function as risk counselors to their customers.
The new data streams provided by IoT devices, when combined with advanced analytics, have paved the way for usage-based insurance (UBI), also known as pay-as-you-live and pay-as-you-drive insurance, in vehicle insurance.
Insurers can now personalize policies based on specific driving habits and usage patterns. UBI policies are expected to reach nearly 15% market penetration in most major global regions by 2020, according to estimates.
Drone assistance for vehicle damage inspection, telematics-based driver assessments, and the use of beacon technology to help consumers make better driving decisions are all possibilities for car insurance. This helps the carrier in limiting claims and benefits the client by lowering premiums.
Similarly, the rapid adoption of wearable technology in healthcare insurance provides for better risk assessment, simpler, and more economical solutions. Before customizing products, health insurers can track data from wearables to understand their consumers’ risks. Beam Dental, a dental insurance firm, uses smart toothbrushes to collect data and subsequently determine premiums.
In short insurance companies can use algorithm to monitor your life and will limit or deny coverage.
A recent survey by LexisNexis Risk Solutions reveals that till now insurance sectors lack the knowhow of working with IoT data and the potential it can offer insurance carriers with its real-time inputs from IoT sensors.
Algorithms can show biased news which can change our perspective towards that particular topic. They know what you are interested in, where you went, at what time, when you sleep, when you are getting up, things you buy, wear everything.
Conclusions
IoT is a promising concept and will only gain more value, transform the insurance industry and increase opportunities to expand their business processes. However, with the benefits of every technology, there comes the burden of careful use.
Insurance brokers should always remember how to protect their consumer data and how to keep it confidential. Consumers should be aware that if they provide information about themselves, the insurance company will keep that data confidential and protect that information from external sources.
References
7 IoT Business Models That Are Transforming Industries (danielelizalde.com)
How Insurers Can Use IoT Data to Be Game-Changers — The Digital Enterprise
How IoT is Affecting the Insurance Industry — Embroker
- Written By: Subhidh Agarwal
- Edited By: Shreya Agarwal
