The Internet of Things

The IoT Will Spread to Everything We Touch and See

Almost every person who thinks and discusses the Internet of Things (IoT) does so in terms of its impact on manufacturers, retail, and logistics. And that’s all true. But for those of us in our little global trillion dollar pond of insurance, IoT has the promise and peril of reshaping the landscape of risk. That is due to the fact that the IoT will spread into everything we touch and see.

A growing portfolio of IoT categories

For the purposes of this post, let’s create a list of categories which IoT could or might impact regardless of how obvious or far-fetched the categories might be.

  1. Driveables – this is one of the two most obvious categories with all the digital ink used to discuss telematics and usage-based insurance (UBI). We need to also keep in mind that the IoT can also be used for every component or part of every vehicle rather than just keeping track of the location of the vehicle or the driving behavior of the person behind the wheel.
  2. Wearables – this is the second of the two most obvious categories. In my small town of Hopkinton, the folks managing the race used chips in the shoes of the runners in the 100th race some years back. The chip began its operation when the runner crossed the Start Line and continued until the runner crossed the Finish Line. This meant even the last runner waiting patiently to even see the Start line didn’t have to worry about not having his/her running time captured correctly. However, you probably know of many examples of wearables now on the market which help people live a self-measured life.
  3. Appliances for the home – our appliances, from toasters to washers/dryers to refrigerators to radios, are all fodder to have sensors in them to record their status and/or need for repair.
  4. Appliances for the company – appliances in any business, from copy machines to fax machines to telephone equipment, are similarly tangible assets which can house sensors.
  5. Furniture for the home – each piece of furniture in every room of a home could have a sensor in it. (I think Lewis Carroll would have fun with this IoT category … Clean me! Don’t put that cold drink on me without a coaster!)
  6. Furniture for the company – similarly every piece of furniture, including filing cabinets, in a company could have a sensor in it to mark its age and usage.
  7. Buildings (home and companies) – each 2X4, each wall, each piece of insulation, each pipe, and each electrical wire could house sensors to mark age and usage (and repair and replacement) as well as destruction, remediation and replacement costs.
  8. Transportation – each of the roads we use can become “smart roads” to record and transmit type and amount of vehicular traffic as well as weather conditions (e.g. icing, volume or weight of snow) and relay that information to city planners and commuters.
  9. Natural land features – each lake, river, tree, bush, and plant could be equipped with sensors to capture weather conditions, amount of sunlight, watering, and pilfering or destruction.
  10. Purpose-built features – these include utility poles and wires, bridges, over-passes, and if you want the roads/highways part of transportation.
  11. Healthcare – possibly one of the richest space for IoT to encompass equipment, surgical instruments, medicine, and the various tangible assets within a hospital.
  12. Technology equipment (including telecommunication devices) – this is already being done as we all know but why not monitor the usage and repair needs?
  13. People – there will be people who will want a sensor (whether as a bar code printed on them or a miniature device embedded in them) to better monitor their measured lives and their health condition (why yes, I can have another glass of red wine….)
  14. Animals – we are already embedded chips in our pets and, I assume, farm animals, to track their location.
  15. Insects – well, why not if we want to track insect-borne diseases or disrupt the mating habits of insects carrying disease?

So what?

Each tangible asset, or physical artifact if you prefer, with a sensor which receives and transmits (which to me it needs to do to truly be a member of the IoT) will tie the world around us even tighter. Moreover, each member of the IoT will consume, generate, and publish a stream of content from simple structured data to rich media. Keep in mind that Big Data and its concomitant analytics and visualization are emergent properties of an IoT environment.

Challenges and questions emerge for insurers:

  • What data do you need to capture for product development, actuarial pricing, underwriting, channel management, and customer service?
  • What is the frequency and volume of each type of data that you need for each purpose you have identified?
  • What analytical capabilities will you need which you don’t have now or need to strengthen to effectively and efficiently use whatever streams of data you want to use?
  • Will you be able to really think and operate like Google or Amazon? That is, will you be able to scale up your strategic and supporting initiatives to compete in an environment of truly Big Data?
  • Will you be able to seamlessly incorporate geospatial capabilities, including geographically visualizing where the IoT elements are, when they transmit or receive data and what types of data the IoT tangible asset is receiving or sending?
  • What are the types of partners you need to successfully compete in the IoT environment?

What categories or challenges to insurers have I missed?