The Internet of Things (IoT) is the third wave in the development of the Internet, following the development of Internet connectivity for desktops and then mobile devices. IoT is making everyday objects smarter and more connected. Although the adoption of this networking technology has been slow, companies that have incorporated IoT technologies have experienced soaring profits and enhanced efficiency. Due to the ability of the Internet of Things to collect and report real-time data in a healthcare, business, and industrial environment, it is projected to revolutionize the way we perceive things. This utility of IoT is now increasingly being realized in the insurance industry.
In the present-case scenario, companies in the insurance industry collect premiums from policy holders, channel this money into investments, and then reimburse the money in case of an accident, death, or maturation of policy. The majority of the existing policies in the insurance sector are created using historical data. However, with the adoption of the Internet of Things in the global insurance industry, this will undergo a dynamic shift.
How Real-time Data Analysis via IoT Tech will Transform Global Insurance Industry
The Internet of things will help insurers price their products based on historical data and real-time data. This will allow insurers to provide customized and fair policies. The IoT will also help insurers reduce risk and mitigate costs in many ways. A few healthcare insurers are offering consumers lower premiums, free fitness trackers, and other benefits to help consumers meet their daily exercise goals.
Property insurance firms are using drones to analyze damages after an accident. Drones are projected to improve the workflow efficiency of insurance adjusters by more than 40%. Pay-as-you-drive car insurance, for instance, allows insurers to charge consumers according to their driving behavior.
Indian Government Taking Efforts to Drive Economic Growth Using IoT
Similar to global companies, many Indian companies in the manufacturing sector and insurance industry are expected to deploy IoT technology to fuel their efficiencies. In 2014, the Government of India declared that it was planning to create a US$15.0-bn IoT market in the nation in the coming five years. Commercialization of the Internet of Things in India is expected to offer high prospects for the global market.
Role of IoT in Indian Insurance Sector
IBM states that the IoT can prove to be a boon for the insurance segment in India. Consumers in India can avail healthcare services in a much more precise and customized manner through IoT technology. For example, wearable fitness bands will allow elderly consumers to monitor their health data frequently. This real-time data will allow doctors to prioritize treatment for patients who need immediate medical care. Similarly, data from interconnected smart devices in a home environment will allow insurance companies to keep an eye on the home when nobody is at home. This will decrease incidents such as thefts and allow insurers to protect assets in a home. The IoT offers a plethora of opportunities in the Indian insurance industry not only to established players, but also to new entrants. Firms such as Cisco, Intel, and IBM are using their venture funds to invest in insurance companies.
Compromised Privacy: Major Hurdle in Adoption of IoT in Indian Insurance Industry
The adoption rate of the Internet of Things in India’s healthcare, manufacturing, and insurance sectors is low due to unwillingness of companies to adopt IoT technology, lack of awareness, high cost associated with IoT devices, and infrastructure issues. Apart from these issues, the lack of privacy is another major concern the IoT insurance market needs to address. Smart connected technologies are making things transparent; however, due to their very nature they carry the risk of compromising private data. The way the insurance sector deals with this concern will, in a large way, determine the course the adoption of IoT will take in the next few years.