Other parts of this series:
- Insurers are grasping the need for ecosystem partners in the new sharing economy
- Insurers must re-examine all their business operations to capitalize on the power of digital ecosystems
- Insurers must move now to secure a presence in digital ecosystems and be ready to seize new opportunities
- Insurers must balance the needs of their traditional businesses with the demands of new digital ecosystems
- Insurers can learn a lot from how Google is balancing the demands of its traditional and emerging businesses
- Insurers need to be alert to the role of the Internet of Things in the rise of digital ecosystems
- Insurers must be ready to compete in markets that will be increasingly disrupted by digital technology
- Insurers must change from being providers of products to digital ecosystem orchestrators
The rapid spread of the Internet of Things (IoT) will accelerate the influence of digital ecosystems throughout the insurance industry.
As more insurers provide customers with smart protection services, rather than merely compensation in the event of misfortune, IoT platforms will become crucial components of their digital ecosystems. They’ll form an important link between many of the different ecosystem services as well as providing a closer relationship between insurers and their customers.
Carriers need to be alert to the strategic importance of the IoT and its key role in the development of digital ecosystems. Neglecting this relationship could result in insurers’ missing vital opportunities to expand and grow their businesses.
Insurers such as AIG, Allianz and Aon, for example, are already deploying connected solutions that use smart sensors to gather customer data. Such data enables carriers to aggregate and match products and services so that they meet the needs of specific customers. They can also incorporate this information in their data analytics systems to gain important market insights and monitor the effectiveness of their connected insurance products.
IoT applications are set to soar. By 2020 there will be an estimated 50 billion intelligent connected devices around the world. Around 2.5 gigabytes of data was generated by the IoT in the past 24 hours and this will grow substantially.
The IoT has been quick to make its mark in the transport industry but is also growing fast in the operations and healthcare sectors. It’s increasingly prevalent in the automation of physical spaces such as homes, hospitals and workplaces. All of these environments provide big opportunities for innovative insurers looking to expand their digital ecosystems by introducing new connected protection solutions. All four of these markets have begun to attract a variety of insurance providers – ranging from start-ups, to niche specialist firms and big multinational corporations. But none of these firms has managed to establish dominance. Strong competition for ascendency seems likely in the next few years. Partnerships between insurers, as well with external providers, will also increase.
Insurers eager to roll-out digital ecosystems need to look closely at the potential of the IoT, identify key opportunities and partners, and move swiftly to bring their offerings to market.
In my next post I’ll examine some of the major structural shifts taking place in the insurance industry as a result of the emergence of digital ecosystems and other digital disruptors. Until then, you might find this report by Forrester Consulting helpful.