The IoT, dogs and the toughest market conditions for a generation

The internet of things (IoT) is changing the way we live.

All aspects of our life are being influenced by connectivity, sensor technology and predictive analytics.  Insurers are looking to expand the incorporation of this latest technology into innovative insurance products, with the aim of generating further market share, having greater insight into the risk profile of the insurable interest and enhance shareholder value.

Telematics has been a hot topic in the motor insurance industry for a number of years now and we are all familiar with the idea of using a black box or a smartphone app to measure driver behaviour. Motor insurance premiums can be determined based on the riskiness of the driver, as measured using these means.

But what about the idea of using telematics in other types of insurance? Telematics for pet insurance? Or telematics for home insurance? 

Pet insurance – ’Tele-mutt-ics’

Usage-based technology has been introduced in the pet insurance sector with microchips or GPS collars used to monitor the fitness and wellbeing of pets. Insurers can use this information, for example how frequently they walk their dog, to identify how responsible the pet owners are.. If the owner can prove they are responsible, insurers can reward them through lower pet insurance premiums.

’Tele-mutt-ics’ is a pet insurance policy that is already putting this into practice. The policy was developed by UK insurer Bought By Many, and uses data collected from a microchip to identify the wellbeing of the pet.  Policyholders can save up to 20% on their insurance premiums by demonstrating that they are responsible.

Home insurance

Smart technology within homes can also be used to determine household insurance premiums. Devices can be used to monitor different aspects of a property, and could be used to contact the relevant external parties in the event of an issue. For example, a device could be used to detect whether a water leak is present, and following this communicate a message to the water supplier.

Other examples of items that could be monitored:

Automated warnings could be particularly useful for young homeowners who are less aware of the maintenance demands of properties. Exclusions would certainly exist in these policies, such as the requirement for policyholders to act on particular alerts otherwise risk invalidating their policy.

Innovate or die

This rush by insurers to innovate is being driven by some of the toughest market conditions ever seen.

Poor rate adequacy, excess capacity and newly emerging disruptive competitors are forcing executives to drive their businesses harder than ever.  We will see many more innovative uses of IoT applications -  some of which may seem bizarre and pointless - but that’s innovation!

Holly Deakin and David Hughes contributed to the writing of this blog.

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