The next big thing in technology isn’t coming—it’s already here.
The Internet of Things (IoT) presents great opportunities for the global economy. Over the next several weeks, I will be blogging on Accenture’s views on the IoT, which we presented at the recent Davos conference. I will also outline ways in which insurers can take advantage of this emerging trend.
The Internet of Things—a network of physical objects, systems, platforms and apps that communicate and share with each other, the environment and people—has quite literally hit home. Thermostats, appliances, web cams and televisions are turning homes into digitized environments, known as “connected homes.” The market for “smart locks”—which use smartphones as a key—is currently about $261 million, yet is projected to grow to $3.6 billion by 2019.
But its impact is much wider than that. From vehicle telematics and real-time patient health monitoring to plant automation and remote-controlled ocean-going tankers, virtually every industry is exploring the potential benefits. Companies like Boeing and Caterpillar are equipping their products with thousands of embedded sensors, communicating machine-to-machine (M2M) status back to their servers. In fact, Caterpillar is using telematics provided by Accenture to offer connected equipment services for its customers. There are few areas, if any, that will remain untouched by this phenomenon.
The IoT wave hasn’t even started to crest; analysts estimate that its growth could add US$14.2 trillion to the global economy by 2030.
Based on projections such as this, it’s not hyperbole to say the IoT economy could easily parallel, or even surpass, the economic revolution brought about by the emergence of electrical power at the turn of the last century. The substantial boost to productivity laid the foundations for entirely new markets, from the light bulb and domestic appliances, to automotive, semiconductors and software.
The IoT is already improving productivity, reducing operating costs and – in the industrial sector – enhancing worker safety.
For insurers it offers the potential to improve both revenues and profit margins through better risk management, underwriting and new product offerings. It can also help carriers build closer, more durable relationships with customers.
However, just as with the electrical revolution of more than 100 years ago, the longer-term economic and employment potential means businesses must develop entirely new product and service hybrids that disrupt their existing markets and generate fresh revenue streams. This change will affect all businesses, including the insurers that provide the life, health, commercial, home and auto coverage that protects them.
The IoT represents a huge opportunity for the insurance industry. But are insurers ready for change of this magnitude? We’ll take a look at their preparedness in next week’s post.
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