Insurance is one of the fastest-growing sectors in the global IoT market.
Growth of the insurance sector in parallel with innovative insurance models and growing usage of IoT to reduce the premium and risk-related costs are some of the major factors driving the studied market adoption in recent years.
Reportlinker.com announces the release of the report “IoT Insurance Market – Growth, Trends, COVID-19 Impact, and Forecasts (2021 – 2026)“.
The growing adoption of digital technologies across various end-user industries and advancements in devices or sensors for collecting data further expand the studied market growth over the forecast period.
According to an Insurance industry report, 20% of the insurance companies were either piloting, testing, or deploying IoT initiatives. A combination of multiple technologies enabler drives this increasing adoption of IoT in the insurance.
According to the study conducted by UK-based insurance market Lloyd’s, IoT will bring various advantages to the insurance industry, such as avoiding preventable losses, better risk understanding, capturing patterns and behaviors, fraud detection, and enabling proactive monitoring.
According to Forbes, IoT can benefit insurance companies by reducing the cost of the claims process by 30%, whereas IoT-enabled devices can decrease premiums by 25%.
- IoT has the power do not just transform in the insurer’s top line, but also the bottom line. Once permitted by the policyholder, insurers can live to raise the data and alerts from IoT devices to deliver services with minimizing touchpoints. The growing trend of connected devices across various industries is mainly enabling insurance companies to have greater control over data, thereby mitigating fraud. IoT implementation will also help to enhance efficiencies of systems, improve protection mechanisms, and reduce claims, leading to cost efficiency. The number of devices used per customer had increased significantly, denoting rating higher acceptability in the ecosystem.
- With smart grids envisioned to globally take over the entire energy industry, the IoT utilities are expected to gain traction over the forecast period. 5G is likely to bring advancements and further expand the scope of IoT- enabled solutions in the sector. Many industry experts also claim that the vehicle telematics is leading the 5G in IoT insurance application. The rising commercialization of 5G will allow the collection of more granular data in real-time about the performance and health of the vehicle and the drivers’ behavior and enable the delivery of more sophisticated pricing plans for insurance companies. For instance, Harman launched the 5G -ready car telematics solution.
- The recent COVID-19 outbreak and the nationwide lockdown have impacted many industries worldwide; however, insurance is once such sector that has witnessed a significant surge in demand, especially in health and related segments. Due to COVID-19, many industries have increased their investment in IoT solutions, especially healthcare, which further expands the studied market scope. With expanding the reach of IoT enabled insurance services during coronavirus pandemic, it is expected that usage-based insurance (UBI) will only continue to grow. According to the EFMA, 38% of insurers capture data from real-time (IoT) devices, and only 33% mine data via natural language processing-based support systems like chatbots.
- However, with COVID-19, insurers face new challenges that call for a measured, practical, and informed approach. Therefore, the industry needs to upgrade, as companies will need technology more than ever to sustain their business in the post-COVID-19 era. Insurers will need to consider establishing cross-functional, emergency decision-making teams to coordinate the organization’s response, set new safety protocols, and assure quicker action as conditions continue to evolve. To enhance their IoT offering, insurers will need to deploy technologies like AI, Machine Learning, Robotic Process Automation, Augmented Reality, Telematics, Social Media, and Drones.
Key Market Trends
Automotive is Expected to Hold Significant Share
- The growing market for telematics and trends, such as ADAS and autonomous vehicles, mainly drive the adoption of IoT insurance in the automotive and transportation sectors. The NAIC Center for Insurance Policy and Research (CIPR) conducted a study on Usage-Based Insurance and Vehicle Telematics. They explored the effect of IoT and other technologies in the automotive insurance industry and analyzed the implications of telematics for insurers, consumers, and state regulators. The study concluded that telematics-supported usage-based programs provide societal benefits and advantages for both the consumer and the insurer.
- With an increase in the usage of connected vehicles connected to V2X (meaning vehicle to an external IoT device), there is intelligent and cooperative IoT data exchange between them. This data is further utilized for calculating premiums. Moreover, automobile companies with an outlook toward connected cars are currently expanding their area of interest toward insurance telematics in the region. Government and insurance companies are also boosting IoT-enabled automotive, as it also provides safety. The US-based Insurance Institute for Highway Safety (IIHS) estimates that the standard auto brake will prevent 28,000 crashes and 12,000 injuries in the US.
- Additionally, in May 2019, Unipol, Italy’s largest auto insurer, partnered with TrueMotion to leverage data-driven insights from TrueMotion’s platform to power its smartphone telematics programs. This has been achieved through Linear’s BestDriver program in Italy, which is set to promote safe driving and fight distracted driving specifically. In August 2019, FCA Italy and LexisNexis Risk Solutions, a data analytics and technology provider, collaborated to offer European FCA customers a range of customized car insurance and mobility services. The services include insurance policies based on actual vehicle use, short, medium, and long-term car rental or car-sharing solutions.
- Advancement in telematics is further enhancing IoT enabled insurance, as it helps in calculating premiums and limiting fraud claims. According to Towers Watson, multinational risk management, insurance brokerage, and advisory company, IoT-enabled telematics technology can help reduce high-risk behaviors in young drivers, as approximated, by more than 30%, lowering claims costs in this age group by a bare minimum of 30%. In November 2019, Active Communications International hosted a joint Insurance Telematics’ and ‘Connected Cars’ conference in London, which looked onto integrated GNSS systems as providing more than just positioning and navigation.
North America is Expected to Hold Major Share
- North America is expected to hold a significant market share in the IoT insurance market, given the growing awareness and the faster adoption of IoT. Many companies, such as Progressive, Liberty Mutual, and State Farm, are leveraging the IoT technologies in this region to enhance their efficiency, in terms of risk assessment. John Hancock, a major insurance company in the United States, was one of the first to utilize the power of wearable devices by partnering with Vitality, distributing free Fitbits to customers, and tracking their well-being, making them less at risk of filing a claim. Moreover, the company is home to some significant players who offer their IoT solutions for various insurance companies.
- The region is also witnessing an increasing number of startups. In June 2020, the US-based startup that offers an AI-based data platform for insurance underwriting, Planck, raised a USD 16 million Series B led by Team 8 Capital, anticipated that clients would need to handle an influx of insurance requests as businesses adapt to the COVID -19 pandemic. US-based car insurance company, Progressive, uses its usage-based-insurance (UBI) telematics program to monitor how its car insurance customers drive. The company has made observations of over 1.7 trillion drivers and says that its prices are based on “how user drives, rather than just on traditional factors like where users live, and what kind of car users have.”
- In April 2020, Parsyl, Inc., a US-based supply chain data platform, announced ColdCover by Parsyl Insurance, a suite of connected cargo insurance products for perishable goods powered by its IoT data platform. As the only integrated supply chain visibility and cargo insurance solution, Parsyl has created a data-driven insurance offering that is simple, transparent, and fast, including the industry’s first and only parametric spoilage policy, protecting against losses due to temperature. Parsyl’s cargo insurance suite gives shippers of perishable goods the coverage, predictability, and protection they need for their products’ most significant risks.
- In September 2019, Bell announced an expanded reciprocal roaming partnership with AT&T to provide Canadian business customers access to AT&T’s LTE-M network across the United States. Bell was the first Canadian company to launch a 5G-ready LTE-M network in Canada, transforming how Canadian insurance businesses leverage the Internet of Things (IoT) technology. LTE-M supports various low-power IoT applications with enhanced coverage, lower costs, and longer battery life for IoT devices connecting to Bell’s national network. Bell LTE-M supports a wide range of large-scale IoT innovations, including asset tracking, fleet management, smart sensors, and smart city applications, etc.
The IoT insurance market is highly competitive, owing to the presence of many large and small players in the market, operating in the domestic and international markets. The market appears to be fragmented due to the presence of many technological giants in the market. Some of the major players in the market are IBM Corporation, Microsoft Corporation, Intel Corporation, and SAP SE.
- April 2020 – HBF, a private health insurer based in Australia, adopted Oracle Health Insurance (OHI) to support its digital transformation as part of a broader strategy to modernize its systems and processes. The organization currently has more than 1 million members and a robust reputation in Western Australia. With Oracle Health Insurance as the core platform across its health insurance products, HBF aims to grow its membership and expand its services throughout Australia.
- May 2020 – Verisk and Geotab announced that the Verisk Data Exchange Add-In is now available on the Geotab Marketplace. Fleet customers of Geotab, which provides connected vehicle solutions for improved fleet management to more than two million global subscribers, can now choose to share their telematics data directly with insurers participating in the Verisk Data Exchange through this new integration. The data will help commercial auto insurers gain more granular insights into fleet risks to refine underwriting, rating, and other potential insurance services for participating policyholders.
The post The IoT insurance market is expected to grow at a CAGR of 40% over the forecast period (2021-2026) appeared first on IoT Business News.