The Connected Insurer

Welcome to Insurtech Insights.

This month we are diving into the ocean of Connected insurance. It wasn’t always an ocean. Just 15 years ago it was more like a creek, with Steve Irwin like actuaries exploring the raw beauty of data coming directly from their risks. They could taste a solution where proxy rating factors were discarded, and the true flavor of the risk could be savored.

The early pioneers were the telematics guys – Hollard in South Africa and Norwich Union in the UK. They used sensors placed inside the insured’s vehicle to gain an understanding of where, when, and how the vehicle was driven. Then they waited for accidents to occur.

In Hollard’s case it took more than 3 years of waiting (and buckets of losses) to build up sufficient driving and correlated claim data to develop their predictive scoring model. However, once in place, it was like having a crystal ball - to peer into the future of each driver and see who would most likely have accidents. New policies were created to take advantage of the insights derived from the connected data stream. Good drivers were rewarded with premium discounts while bad drivers were penalized. Over time Hollard’s telematics portfolio became a haven for the best drivers in the country.

Fast forward to present day and these data creeks have truly become an ocean. The ever-reducing cost of IoT sensors, falling data transmission costs and the proliferation of powerful, yet cheap cloud computing platforms are all contributing factors in this revolution. We now have the same data feedback model of the early telematics guys being replicated into many different lines of business, often with AI technology replacing our “crackpot” actuary to make sense of the sea of data.

So, this month, let’s cruise the ocean with Rick Huckstep, as he discusses connected offerings for the home. He looks at how the proposition has evolved so insurers provide daily value for customers from the data shared and how that in turn promotes customer engagement/brand loyalty. He also looks at the use of blockchain in conjunction with IOT data to create “Smart” insurance. He discusses aspects of smart insurance for the home with one of the founders of Cozify – an InsurTech that’s developed a solution that overcomes the adoption barriers for the smart home. Finally, Rick muses about a future where machines can glean personalized meaning from all of the data being shared in what’s termed the “Semantic” web.

In our second featured article for the month, Chia Tek Yew examines a different part of the ocean, where connected insurance is being used for health purposes. I especially enjoyed his story on how connected data is being used to give insurance cover to diabetes sufferers, who typically find it difficult to buy affordable cover. Unsurprisingly, both Rick’s and Chia’s articles share similar under currents of providing new value and utility for customers.

Finally, our newsletter has a curated set of articles from around the world about connected insurance. You’ll find those by following the link below, if you want to dig deeper and see examples of how this approach can be applied to other lines of business.

I am sure you’ll enjoy reading this month’s edition of InsurTech Insights proudly supported by KPMG. Thanks again for taking the time to stop by – it really means a lot to us.

Yours digitally,

Andrew Dart