The Internet of Things presents plenty of opportunities for insurers to foster innovation, better understand risk and connect with customers. But in order to capitalize on these opportunities, it’s crucial to understand how the Internet of Things (IoT) is disrupting the core of insurance.

How the Internet of Things is changing insurance

Accenture analysis finds that the IoT is changing the core of insurance across three dimensions.

  • Different consumer expectations. Insurers must understand that claims adjusters are no longer expected to simply process a claim or manage a transaction—they are company representatives who play a crucial role in easing a customer’s distress. Data and analytics can help insurers deliver a differentiated, personalized customer experience that encourages ongoing dialogue and builds a long-term customer relationship. Consider a routine collision claim. With the IoT, a connected car could run a self-diagnostic. Using machine-to-machine (M2M) connectivity, the vehicle could find the closest repair shop that specializes in those kinds of repairs, and coordinate a rental vehicle. Within minutes of the accident, the customer could receive a notification of these details through their channel of choice. Crucially, the insurer must be able to plug into this seamless ecosystem to direct, track and refine a differentiated claims experience.
  • New products and new risks. Evolving customer expectations and the changing nature of risk have far-reaching consequences across the insurance enterprise. The past year has seen much interest in the commercial use of drones for insurance, not to mention plenty of consumer interest in recreational use. However, there are still privacy and regulatory issues to be worked out in both cases, especially given increasingly common reports of drones interfering with commercial or emergency aircraft.
  • New competitors and new contestable markets. Digital innovators are changing the standard for customer experience and forcing traditional industries to follow their lead. For example, if you’ve ever shopped at an Apple store, you may have noticed the seamless design of the store and the customer experience. There is no cash register; sales associates can take payment on the spot, and provide a receipt in hard copy, email or text message. Seamless transactions like these are becoming the standard to which other companies are judged—and claims leaders in particular should be aware of how it compares to the lengthy, often opaque claims experience.

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