Insurers may recognize the importance of collecting and mining data, but a recent U.S. study shows few currently have an IoT strategy, are collecting IoT data, or have dedicated resources.
LexisNexis Risk Solutions released a white paper Tuesday entitled, Are you prepared for the insurance data tsunami? Challenges and opportunities from the Internet of Things. The paper includes a survey of 480 U.S. insurance professionals from “top 100” auto, home, commercial and life lines of business. Respondents were asked to gauge how IoT data fits into their current and future business strategies, and the extent to which this data is being collected and used today.
The research found that while 70% of respondents agree that gathering IoT data is important to their organization’s current insurance strategy, only 21% actually have an IoT strategy, and just 7% have the human and technology resources required to use it in decision making. Of those who said they currently collect data from telematics, wearables, connected homes and properties, only 5% use it in their day-to-day analytics.
“Carriers already use data to make better decisions,” said Bill Madison, CEO of insurance for LexisNexis Risk Solutions, in a press release. “But given the looming tsunami of data from the Internet of Things, we were surprised to learn how few are prepared to leverage it into their business strategies and customer offerings.”
Are Canadian P&C insurers leveraging the data created by the Internet of Things (IoT)? Canadian Underwriter reached out to three Canadian P&C insurers to ask about their IoT use and strategy, but none were able to provide information by press time.
Other survey findings of the LexiNexis white paper include:
Most carriers think of IoT at a tactical level rather than at a strategic level (i.e. when asked to define IoT, most used terms like “network of connected devices”). Few respondents discussed IoT in terms of strategic uses for underwriting, claims and other analytics.
Many carriers are looking ahead three to five years from now, with 63% having a defined IoT strategy by then, and 36% planning to having dedicated resources within that timeframe.
While the majority (70%) of carriers said that gathering IoT data is important to today’s strategy, only 48% said the ability to collect and use IoT data will define industry leaders. “This suggests that many are taking a wait-and-see approach and will use existing in-house systems until the return on investment of IoT is proven in the competitive landscape,” LexisNexis Risk Solutions said.