The greatest value to insurance industry players and their customers will likely not be realized without expanding the number of data-based use cases, Matteo Carbone, founder and director of the Connected Insurance Observatory, recently suggested.
“Connected insurance is about gathering data,” Carbone said, speaking about the Internet of Things (IoT) in insurance during a media briefing last week at Ryerson DMZ, hosted by Insurance-Canada.ca.
“If you are using that data for only one use case, (you) would always be unhappy about the cost of that technology,” maintained Carbone, who was in Toronto last week to meet with a number of major Canadian insurers to discuss connected insurance.
“The more you are using that data for different use cases, the more you will be able to achieve a positive ROI (return on investment) and to share part of that value with the customers,” he told reporters.
“Today, when people are talking about IoT in insurance, and especially on the car, they’re talking about price,” Carbone pointed out. That limited view means “they are missing an opportunity.”
By focusing on price, Carbone suggested usage-based insurance (UBI), for example, is being defined as a technology with one use case, which, clearly, is not the case.
Matteo Carbone, Founder and Director of the Connected Insurance Observatory
Best practices around UBI relate more to “delivering something that is addressing claims management, are bringing services to the customer, are doing self-selection, but they are not using the data to provide you a price,” he maintained.
Looking beyond UBI and auto, Carbone (pictured left) suggested insurance companies in Canada are not currently seizing the opportunity to used IoT and connected insurance to better claims management.
He advised that insurers need to do three things in this regard: obtain objective information about what is happening so the way claims are addressed can be improved; be proactive (that means no longer waiting for first notification of loss, but anticipating that); and fostering prevention.
“If you are able to prevent or change risky behaviour, really you are adding value,” Carbone told reporters. “You are not only optimizing the payout, but you are really improving the level of risk of your portfolio and, in that perspective, you are also generating positive externalities,” he said.
“Connected insurance is a way to create value and to share part of that value with the customers,” Carbone emphasized.
That value can take the form of discounts, incentives, cashback on something being purchased, “but in the end, if you are with that approach changing a behaviour, making the insurance portfolio less risky, you are bringing a value also to society.”
Whatever the identified need – for example, an overland flood solution – the most difficult task is to “create the value proposition that can work.”
It is “not enough to take the insurance coverage and to take that technology and put them together,” he emphasized. Not only is there the need to create something that addresses customer need, it also must presented in an attractive way, is sellable and fits the company’s distribution approach.
“You really need to tailor the value proposition to the specificity of your context,” Carbone said. “The problem is not finding the right solution, finding the right hardware,” he noted, “but really have a clear view about where you would like to go.”