2022 is an exciting year for the insurance industry. If you are even somewhat invested in the space, it’s a known fact that insurtechs are popping up everywhere with innovative ideas on how to solve various inefficiencies that hinder the industry.
With the name “insurtech” serving as a hint, these players utilize technological innovations designed to squeeze out savings and efficiency from the current insurance industry model(s). The goal of almost all of these groups is to push and enhance the mission of digitizing the insurance industry.
Although there are too many different innovations in the world to name off in one go, there are certainly options proving to be reliable and effective in gathering data to uncover and price risk, as well as to reduce fraud. But is there such a thing as too much data?
Internet of Things (IoT)
One item in the digital transformation realm that has been up and coming for a few years now in insurance is IoT (Internet of Things) tech. IBM defines IoT as “the concept of connecting any device (so long as it has an on/off switch) to the Internet and to other connected devices.” You can find this technology in a variety of industries outside of insurance – such as smart kitchenware, fitness technology and even sports technology.
Aside from accelerating and optimizing underwriting, there are some interesting implications in creating a MUCH more comprehensive risk profile for a driver. Added insight from IoT used in addition to data, such as motor vehicle record intelligence, could include real-time telematics insight and even vehicle information. In a more abstract mindset, the implementation of IoT devices is a driving force in autonomous vehicles in a multitude of facets, including the ability to map routes while the vehicle is in motion, and even report obstacles.
Data Privacy
Of course, having a risk profile as robust as this sounds amazing from an insurer’s perspective. Having violation data, day-to-day driving behaviors and then potentially information on vehicle health would be arguably everything you’d need to quote, bind and renew a policy. Risk could be priced more accurately to reduce premium leakage, action by the insurer could be taken sooner if risky behaviors are exhibited and, of course, insight and ability to compile these risk profiles could be sold for a pretty penny from the vendors in the space.
On the other hand, according to a Consumer Intelligence survey, the majority of drivers on the road would prefer to not be monitored or “watched.” Similarly, that same survey shows that the younger the driver, the less likely they are willing to be continuously monitored via telematics.
So given that the largest population of drivers on the road (under 45 yrs old) are primarily against being monitored, from an ethical standpoint, where does the line get drawn to having too much data at an insurer’s fingertips?
Make the Most of Your Existing Information
You may already have access to good data, but all of it is useless unless it’s informing long-term strategy. If you’re struggling to identify the best way to utilize the information you have available – especially if you’re trying to reconcile multiple data sources – watch our webinar below to learn how data can be better leveraged to help you make more strategic decisions.
