As companies close the books on 2014 and begin to execute on their 2015 plans, managements might want to take another look at how technology can help reduce claims payouts, always the biggest single expense for insurers. The emphasis to date has been in areas such as fraud detection and analysis, claims automation, and using analytics to improve underwriting.
The arrival of the Internet of Things, telematics, the connected home and other innovations is changing the game for insurers. Rather than trying to reduce the amounts paid out on a claim, there is greater focus on eliminating the loss altogether. Residential fires are a great example: The average claim is in the neighborhood of $35,000, and even the best claims experience is something no customer wants to go through. So personal lines property and casualty insurers are now teaming up with providers of home security and monitoring services to get homes “wired” to detect fires before they get out of hand and cause significant damage.
The service providers gain new customers; the customers get a discount from the insurer; and the insurer saves money on fire loss payouts. It’s a win-win-win situation all around.