- Where Insurance & Technology Meet

The Internet of Things and Insurance Connectivity: A New Construct?

What happens when you take creepy invasions of privacy to the next level? I’m not 100% sure, but I think we need to take a careful look at it, because it could allow increased insurance functionality within the Internet of Things.

Which begs the question: Could this spawn the Internet of Insurance Distribution?

Privacy or cheap shoes?

Consider this: According to the Canadian Marketing Association, as reported in eMarketer, “Internet users in Canada are creeped out by targeted ads—but then again, they like targeted offers.”

When asked whether they were comfortable with internet based advertising that collected data from browsing activities, only 1/3rd of respondents reported being comfortable.  Thirty six percent were uncomfortable and 29% were unsure.

However when discount coupons, based on the same monitoring of web activity as above, are introduced, the approval rating  leaps to 52%.  So, we get more comfortable with shaving off parts of our privacy if we get 15% off some shoes we really want.

As a consumer who likes shoes, I’m cool with that.  What’s the next step?

Talk to my agent …

Esmeralda Swartz, CMO of MetraTech, a subsidiary of Ericsson, has written on how the Internet of Things (IoT) is becoming the Internet of Agents.  Her contention is that isolated “things” are not as helpful as as clusters of “things” that actually perform actions that we want done.  And these clusters can come under the control of Agents that have knowledge of our needs and wants and can take actions on our behalf.

Swartz gives the example of ordering movies across multiple movie providers.  Assuming that I have subscriptions to the providers, Swartz writes,  “when I want to watch a specific movie, I don’t have to visit each online service in turn to search for it. I ask one agent where I can find that movie, and then I ask the relevant streaming agent to send it to me. (Soon those two steps will be one, I’m sure.)”

When you don’t own anything, you have better control of everything….

Swartz say that the power of the Internet of Agents depends on  IoT dovetailing with another trend, the evolution of the Everything as a Service (XaaS) model.  This means that we don’t really own things, we just use them when we need them (and pay a user fee).   Think software (Microsoft Azure, Google Docs),  cars (Zip cars), Food Delivery (Uber’s latest offering).

So this is a trend.

On the insurance front, it is status quo …

We are already used to the service model.  Insurance is a bundle of services, delivered for a period of time, for a fee. The bundling of the services (policies) is a combination of automated (package policies) and customized (optional coverages) offerings.  Claims bundle services with delivery of physical products.

To date, however, the interface between the customer and the bundles has been a physical link – the agent or broker.  For good reason.  This is complicated stuff, with serious repercussions if thing go wrong.

… Until it is not …

But there are incursions.  This blog has reviewed the advances that insurers are making with cognitive computing (e.g., IBM’s Watson with USAA) and  with analytics/Big Data.

However, the interaction among insurers and brokers and customers continues as a very linear 20th century experience.  Much of this relies on aging privacy and data ownership constructs.  This is likely not sustainable, especially given the propensity of  customers to trade slices of privacy for loaves of value. Are we ready to trade with them?

Brokers have an opportunity …

… to work with carriers AND customers to define the trade offs and value points, privacy and data ownership included.  The follow on could be a new picture of broker connectivity that utilizes Internet of Things/Internet of Agents principles to link all parties seamlessly as a network.

What do you think?

I would be very interested in your thoughts.  Please leave a comment below, or drop me a private note: [email protected].  I promise not to trade your private comments, even for a great pair of shoes.