Internet of Things (IoT) is used to monitor drivers' habits, including changes in speed, how often they drive, and the time of day they drive. For insurance firms, the expectation is that this will lead to lower costs through a better ability to assess clients' risk levels. For consumers, this means better premium rates — assuming they drive well.
The most prevalent way of monitoring driving habits is by using On Board Diagnostic (OBD-II) dongles, or plugs, that send analytics about the driver's driving habits back to the insurance company. The dongles are plugged into the car's port under the steering wheel.
The Internet of Things can fundamentally change the way insurers protect policyholders. But when lifestyle and behavioral information is supplemented by other data sources like weather, traffic and healthcare, the volume of information is staggering. Insurers don’t need more data. They need to aggregate and analyze all of this data to proactively shield people and their property.
Insurers have long sought ways to shield policy holders from adverse events or dangerous situations that could result in a claim. IoT generates a wealth of valuable data from today’s connected homes, cars and lifestyles to achieve this goal.
IoT for Insurance can forever change the relationship between the insurer and the insured by aggregating personal, behavioral and contextual data and then aligning analytics strategies based on the insurer’s criteria. These insights can be used to deliver a customized shield of protection for each policy holder to increase customer satisfaction, lower costs and mitigate risk.