ITECH1100: IoT and its Potential Impact on the Insurance Industry

This report examines the potential impact of Internet of Things (IoT) technologies on the insurance industry, highlighting both threats and opportunities. It discusses how IoT can improve operational efficiency, risk assessment, and accident prevention, while also disrupting traditional insurance models. The report explores specific applications of IoT, such as environmental sensors and connected biometrics, and their implications for insurance processes. It also addresses regulatory and ethical considerations, as well as potential disruptions to the industry. The analysis includes a discussion of how insurers can leverage IoT data to monitor driver behavior and adjust premiums accordingly. The report concludes by emphasizing the need for insurance companies to adapt to the changing technological landscape and embrace IoT to remain relevant and competitive. Desklib provides this assignment as a resource for students, offering a platform with solved assignments and past papers.

Running head: THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
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1THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
Table of Contents
Part one: Introduction......................................................................................................................2
Part two – Brainstorming.................................................................................................................2
Part three – Regulation and Ethics...................................................................................................4
Part four – Disruption......................................................................................................................4
Reference:........................................................................................................................................7

2THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
Part one: Introduction
Nowadays, the rapid evolvement of IOT technologies is effecting most of the industries
and insurance industry is also evolving through utilizing this technologies. Some carriers
associated with the Insurance industry will be threatened for sure. However, it will also create
new opportunities to develop early loss exposure, accident prevention and risk observing. It can
also assist the insurance company to improve their operational efficiency, asses price and risk
with greater precision. It also permits them to advance from being humbly payers of privileges to
appreciate partners that assist their customers mitigate, monitor and avoid risk. Other than these
factors there are several other countless opportunities will appear for the industry. On the
negative side, as technologies are renovated into “living services,” insurance could be pushed
into those services, disrupting carriers’ traditional distribution models. Through proper
implementation of IOT in every asset, some challenge will occurs that will make difficulties for
the insurers to stay relevant. How much money will be applicable for the home insurance when
the houses will be monitored 24/7 for the chance of a fire, break-ins or flood decreases
incrementally because they are constantly monitoring their water and heat systems, appliances
and more.
Part two – Brainstorming
There are several way IOT can change the typical insurance industry processes.
Generally, insurance companies collect continues payment for a certain period of time in
exchange of guarantee assets such as home, car and health. Insurance companies protects holders
from financial loss (Zhang and Wen 2016). Basically it is a form of risk management utilized to
hedge against the risk of a contingent or uncertain loss. Insurance companies are provides this
type of services for mainly house damage and repair, vehicle damage or robbed and health

3THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
issues. If one of this dilemma occurs uncertainly insurance holder can get help from the
insurance company to overcome the financial damage (Serafin 2018). However, the evolving
IOT technologies can lessen the causalities and uncertainty causes by weather or negligence. So
there will be no meaning of paying insurance for the asset if the security is implausible. There
are some ways the IOT will change the typical insurance industry in next decade as follows:-
1. Environmental Sensors: the implementations of sensors which can detect smokes,
trespassing of any unauthorized person in the home, office, warehouses and factories.
Nowadays, most of the premises are embedded with the sensors that could detect smoke,
earthquake motion, toxic fumes and other hazardous conditions. IOT devices can also
provide predicative alerts on potential danger (Nourani et al. 2018). This technologies
will surely eliminate the chances of uncertainty that could appeared in a premises. So it
will surely lessen the importance and necessity of insurances.
2. Connected Biometrics: One of the major areas of insurance is healthcare. Millions of
people takes health insurances as the health issues can occurred uncertainty. However,
technologies are enveloped rapidly in the health care areas as well. There are several
wearable devices available which is capable of tracking health status of individuals. This
devices are capable of tracking daily notations and calorie burns.
3. Carrier Process Transformation: the furthermost important alteration will occurs within
the carriers. With more than twenty one billion devices sending and gathering data,
carriers must instantly re-imagine the storing process, carriers will oblige data
warehousing, much larger and more sophisticated IT, and analytics and business analyst
teams to make meaning out of the data gathered (Ju et al. 2016). One of many examples
is the detection of changes in risk warranting a premium adjustment.

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Part three – Regulation and Ethics
A U.S healthcare and insurance company, United Health Group developed a
new strategy to partnered with the Fitbit a wearable device maker that is
able to track users heartbeat to the calorie burn that is helpful to maintain a
proper health record.
Least of factors or constraints that make this impact possible:
 Proper cooperation with the technologies: insurance company can link up with these type
of technologies in order to maintain and develop new opportunities.
 Adoption: Every individual must cooperate with the companies and the approaches in
order to improve the healthy activities. Many health problems can be solved through this
approach. As the technology will detect any problems sooner through checking the health
regularly. This approach is ethical in nature.
 Motivate to Research: government should encourage the developers to create and adopt
the approach through sponsoring money and resources.
Part four – Disruption
Insurers remotely monitored the vehicles, how the drivers drove and they collected the
data allowing actuaries to analyze performance in near real-time. By applying those IoT
methodologies insurance companies know how their customers were related with the danger
behind the wheel with the collected raw data (Balandina et al. 2015).

5THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
Typical system of Insurance
Source :( Author)

6THE POTENTIAL IMPACT OF IOT ON THE INSURANCE INDUSTRY
After utilizing IOT technologies
Source :( Author)

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Reference:
Balandina, E., Balandin, S., Koucheryavy, Y. and Mouromtsev, D., 2015, July. IoT use cases in
healthcare and tourism. In Business Informatics (CBI), 2015 IEEE 17th Conference on(Vol. 2,
pp. 37-44). IEEE.
Ju, J., Kim, M.S. and Ahn, J.H., 2016. Prototyping business models for iot service. Procedia
Computer Science, 91, pp.882-890.
Nourani, M., Chandran, V.G.R., Kweh, Q.L. and Lu, W.M., 2018. Measuring Human, Physical
and Structural Capital Efficiency Performance of Insurance Companies. Social Indicators
Research, 137(1), pp.281-315.
Serafin, C., 2018. A Policyholder's Guide to IoT Claims Coverage. Risk Management, 65(1),
pp.8-9.
Shinge, T., Nishikawa, G. and Araki, M., 2017. Creating New IoT-driven Insurance
Services. Hitachi Review, 66(1), p.41.
Zhang, Y. and Wen, J., 2017. The IoT electric business model: Using blockchain technology for
the internet of things. Peer-to-Peer Networking and Applications, 10(4), pp.983-994.