“Alexa, what is insurance?”
This is just one of many questions that can be asked of an Amazon Echo, our smart home companion that arrived over the holidays.
And as I’m finding out, the part-Siri part-bluetooth speaker that can stream music, tell me the weather or what the traffic’s like, can also be integrated with our smart home devices and hubs.
Turning on the lights, locking the doors and changing the temperature at home are all possible once Alexa is introduced to compatible products and hubs.
As Internet of Things (IoT) devices proliferate and debut at CES 2016, the world’s largest technology trade show happening in Las Vegas this week, insurers will be taking note.
A new International Data Corporation (IDC) report estimates worldwide spending on the IoT will grow from $699 billion in 2015 to nearly $1.3 trillion in 2019–at a 17 percent compound annual growth rate (CAGR).
While manufacturing and transportation (at $165.6 billion and $78.7 billion respectively) led the world in IoT spending in 2015, IDC says the insurance, health care and consumer industries are expected to see the fastest growth over the next five years:
Over the next five years, the industries forecast to have the fastest IoT spending growth will be insurance (31.8 percent CAGR), healthcare, and consumer.”
While insurers have already explored the benefits of connectivity in the auto insurance sector, the connected home represents a major opportunity for property/casualty insurers, according to a report by Accenture.
Insurers can leverage data from connected home devices to assess and mitigate risk, increase pricing sophistication, and offer new products, all of which help drive operational efficiency and top-line growth.”
Key areas of opportunity for insurers identified by Accenture include:
–Better risk management and risk mitigation, through claims avoidance and better claims handling;
–Better underwriting, based on increased data flows and a keener understanding of risk factors and behavioral elements;
–New product offerings, including value-added services delivered in a partnership
Security, energy management, lighting, water, thermostats, weather, appliances, and smoke and fire are the major areas within the connected home where insurers have the potential for improving underwritten precision and limiting losses while strengthening customer relationships, Accenture says.
However, insurers will also need to tackle challenges presented by large inflows of new data such as customer indifference or lack of understanding of new offerings, as well as privacy and regulatory concerns, to convert that opportunity into profitable growth, Accenture notes.