The IoT for Insurance Companies and How They Use Data

A new report details how insurance companies are positioned for change—and how the IoT is leading the way.

Insurance companies set prices by what seems like sheer guesswork—pricing models and strategies built on a series of assumptions about who their customers are and the lives they lead. Younger drivers, for example, are likely subject to higher insurance rates because data indicates that they are more inclined to get into accidents.
But the Internet of Things has its hand in almost everything, and insurance rates are no different. Able to collect and provide analysis for a great variety of data, the IoT may allow insurance companies to provide more accurate (and hopefully more affordable) rates for consumers.
BI Intelligence, a subscription research service from Business Insider, released a report this summer explaining how companies across auto, health, and home insurance industries might use data produced by IoT solutions to guide current pricing models.
While the report is not available without a purchased subscription, Business Insider offers the following key takeaways:

• Auto insurers: Collect data from vehicles to offer policies based on use
• Home/commercial property insurers: Use drones to collect data on damage inspections and offer discounts for the use of data collected by in-home smart devices (sometimes supplied by the insurer)
• Life/health insurers: Offer opt-in fitness trackers to encourage healthy behavior, giving discounts for fitness goals met

The report provides a forecast for the number of Americans who will try usage-based auto insurance by 2021 and considers why tailored wearables could change the health insurance industry. It also analyzes the market for IoT devices that may help insurance companies in the future and discusses barriers to policies that may collect data.​

Theory in Practice

Neos Home Insurance

A startup in the U.K. called Neos recently unveiled a home insurance product that uses sensor technology and wireless connectivity to reduce risks like fire and water damage and burglary by having customers install third-party internet-connected sensors, which come with the insurance product. Depending on the level of package, the service comes with leak, motion, door/window, and smoke detection sensors.
It also comes with an app that manages the sensors, allowing customers to monitor and control connected components, including motion sensors, cameras, and even smoke detectors. If a customer leaves the front door unlocked or has a water leak, they’ll be alerted.
The app also hopes to profit by connecting customers to repair services, especially if they’re on vacation. Currently, the system overall isn't customizable, but Neos is reportedly working on that to allow users to create, for example, a routine to turn lights on to make it seem like someone's home.
Co-founder Matt Poll says, “The vision really is about moving insurance from [a] traditional claims, payout type solution... to one that’s much more preventative, and technology’s really the enabler for that. We also think that customers get quite a raw deal from their insurance company...for being a really good customer and not claiming.”
Poll used to work in insurance, and started Neos 18 months ago. Now, they’re launching their own insurance.

Jooycar's Telematics Devices for Car Insurance

Jooycar is an example in the realm of car insurance. While they primarily serve the Latin American market, their IoT technology has made its way around the world.
By plugging a small telematics device into their car's onboard diagnostic port (OBD-II port), consumers can gain information about when their car is due for repair or how to be a safer driver.

The Jooycar telematics device and its location in a car's OBD-II port.

Jooycar has been on the market for three years and sells connected car technologies to insurance companies. In theory, the data collected from their telematics hardware and reported to IoT devices allows insurance companies to customize their service and quotes. It does, however, also creep some people out to give a company permission to track their location and driving habits, even if it does give them a discount.

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As data gathering and processing becomes more common, we're likely to see an uptick in uses for it such as these. Our homes and streets may be safer for it as we identify various inefficiencies and liabilities. Insurance companies are keenly interested in gathering as much IoT data as possible. In return for access to your data, you may find yourself qualified for, say, safe driving discounts. On the other hand, could we also feasibly be opening ourselves to higher rates if we break the speed limit or fail to do home repairs in a timely fashion?
Have you shared data with an insurance company before? Share your experiences in the comments!