Smart growth entails incorporating new sources of data into existing and new insurance products. As a new generation of connected devices emerge (think The Internet of Things), insurers will need to incorporate data on such elements as location, behavior, time, context and functionality into their products. These products will not only meet the direct risk needs of the insured, but also allow the insurer to provide more value-added information and services to their customers.
For example, telematics devices can help drivers to improve their driving habits, reducing their rates and the likelihood of an accident. Sensors in a home environment can provide early warning of a malfunction such as a broken water pipe and, in the future, trigger a chain of events that minimizes damage by speeding up the repair cycle.
These devices enable insurers to meet a rising consumer demand—more personalized products based on a consumer’s unique risk profile. While this type of personalization has traditionally been cost prohibitive, advanced analytics combined with modernized infrastructures and cheaper devices make these new types of products a critical part of an insurer’s smart growth strategy.