The insurance industry is heading for a massive shake-up. Most executives in the industry can see it coming. Few, however, realize how fast it is approaching and how powerful it is going to be.
The Internet of Things (IoT) will change how insurance is sold and who sells it. Many traditional markets will become obsolete. Aggressive tech-savvy competitors, such as Google, Apple, Amazon and Nike, will increase their presence in the insurance business.
It’s not all bad news. As people, homes, organizations and even cities become increasingly interconnected, an array of new opportunities will emerge. Smart and agile insurance companies will be able to take advantage of the IoT to launch new products, win new customers and capture new markets. These companies will be the Insurers of Things. For them the possibilities will be huge.
I’m not talking about the distant future. Already there more than 14 billion intelligent devices sending information to manufacturing, finance, insurance, retail, transport, healthcare and a host of other systems around the world. In the financial services industry machine-to-machine (M2M) network connections leaped 128 percent last year.
The IoT will disrupt every business – in a big way. In the next five years the number of interconnected intelligent devices is set to double. By 2030 it is expected to reach 100 billion, according to information aggregated by Accenture. The economic benefits are going to be substantial. The IoT will lift the global economy by U.S.$1.5 trillion this year. In 10 years, its contribution is expected to jump to $8.5 trillion. By 2030, it could be as high as $14.2 trillion.
The automotive industry has been particularly quick to recognize the potential of the IoT. Around 60 million cars are likely to be hooked up to networks by 2020. These networks will improve the safety and security of the vehicles, help drivers navigate and deliver a wide range of online information and entertainment services. Similar networks will provide the growing number of smart homes with security, safety and entertainment services. They will also help homeowners improve energy efficiency. The rising popularity of wearable intelligent devices will enable healthcare, wellness and entertainment companies to deliver highly personalized, real-time, location-sensitive services to consumers. All of these developments will impact insurers.
Companies well prepared for the huge changes coming in the insurance industry are likely to thrive. They will become the new Insurers of Things. Those slow off the mark may never catch up.
In my next blog I’ll examine the big changes the IoT will trigger in the insurance industry.