IoT and Digital Distribution Pay Off Big for Commercial Insurers

November 30, 2016
By Kathleen Garlasco

IOT november final blog.jpgIn recent blogs, customer Sarah has revealed the opportunities and challenges personal lines carriers face in the growing Internet of Things (IoT) environment, but the experience of her friend Cam, a medium-sized business owner, demonstrates that commercial carriers can also use IoT to forge new interconnected relationships with business clients while reducing carrier and customer risk.

IoT Solves Customer Challenges

For Cam, life is busy. He owns a home, a car, a pet, and a business, so he was delighted when the commercial carrier for his PR firm offered to simplify things by also providing his personal lines coverage. They easily won his heart and his wallet when they offered to reduce his homeowner's premiums in exchange for monitoring how he used his home security system and his company’s auto policy by installing sensors in company vehicles. Cam received insurance coverage for his personal life and his business at a lower price than he would have paid separately. Even better, he has only one company to engage with for all of his critical insurance needs.

If that sounds far-fetched, it shouldn’t. By combining strong digital capabilities with the world of IoT devices, the future of insurance is a far more interconnected space.

IoT and Digital Distribution Work Hand-in-Hand for Commercial Carriers

The Internet of Things, when combined with strong digital capabilities improves customer interactions. Comprised of an interconnected network of devices, sensors, and objects capable of transmitting data, IoT enables commercial insurers to more directly and accurately determine pricing and coverage needs, while providing stronger, more personal engagement.

As an example, Cam is happy to share information on the driving behavior of his employees using company vehicles because he knows that basing risk assessments on actual driving data will give him more tailored coverage and lower premiums for his business. It will also help mitigate his risk

To reap the tremendous rewards available from IoT, commercial carriers need to employ leading digital capabilities:

  • Underwriting efficiency gains: Underwriters can use data from sensors to more effectively establish risk and premium pricing, but without the right digital capabilities, working across multiple back-end systems can remain a time-consuming and tedious task. Cam’s carrier uses a digital distribution platform that provides easy access to IoT-enabled products and application data through a single console, giving underwriters the ability to more quickly issue quotes and meet the demands of the clients who are immersed in the Internet of Things.
  • Improved loss prevention: Through IoT, insurers can move toward active loss prevention over paying out claims. Storm tracking, for example, enables carriers to recognize threats ahead of the event, but for Cam, weather is less of a concern than cyber security given the need to protect his customer data. In the near future, commercial carriers could easily use sensor data and analytics to identify cyber threats. In that moment, the ability to immediately intervene is essential, but during a business day, Cam is rarely available by phone. He is, however, frequently checking text messages. Thanks to strong digital capabilities, his carrier could instantly alert him to the threat via text, email or any other viable channel, offering support to ensure the security of his customer’s information. By combining the strength of their digital capacity with sensor data, Cam’s carrier will score big in long-term loyalty, while reducing the number of claims.
  • Increased market share: Cam is a shining example of how commercial carriers can gain market share by combining the right digital distribution properties with IoT solutions. Cam’s carrier is at the forefront of both the IoT and digital distribution movements, having taken advantage of a digital distribution platform offering analytics and a vast market network of products. His carrier receives real-time insights on products that could help him reduce risk and protect assets in both his professional and personal life. Then, without worrying about the headaches associated with new product development, they have the capacity to offer a full selection of personal and commercial insurance products without taking on additional risk. By bundling the offerings they do carry with products from others insurers in the network, they have simplified Cam’s life, offering him coverage to fit all of his personal and business needs.

There are other advantages as well. Cam’s carrier is on track to improve revenues by 24% over 5 years while realizing a 5% greater share of market.

The Internet of Things offers substantial opportunities for commercial carriers to reduce customer and carrier risk while realizing gains in efficiency and customer-centricity, but experiencing the full promise of IoT in bottom-line results requires comprehensive digital capabilities, including multi-channel engagement, a single console to streamline customer data for greater underwriting productivity, and a vast market network that empowers commercial insurers to meet more of their customer needs more of the time. To understand how commercial carriers can gain easier access to digital capabilities, including a vast market network, take a look at our thought leadership piece,It's Time for Commercial Insurers to Seize Today's Digital Reality. 

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