Most insurance carriers not ready to use IoT data due to a disconnect

Car insurance companies may give discounts to drivers who allow their cars and driving habits to be tracked, but a recent LexisNexis IoT and State of the Insurance Study revealed there’s a disconnect between how these companies feel about the Internet of Things (IoT) and what they’re doing about it, according to Network World’s Frederic Paul.
According to the study, seven out of 10 of the 600 auto, home, life and commercial insurance professionals who were surveyed said IoT data is crucial to their company strategy today. Even more are confident that its importance will increase during the next five years. Close to half of the professionals surveyed said, “The ability to collect and use IoT data will define industry leaders.”
Despite the perceived enthusiasm however, the industry’s interest in IoT does not appear to be overwhelming. Only about 20 percent of respondents said their companies have any kind of IoT strategy. Even less (seven percent) said their companies possess the “human and technology resources required” to use IoT to make important decisions. Only five percent of respondents who collected IoT from devices like wearables and connected houses and property said they use IoT data in their daily analytics.
“According to our study, there are two primary reasons why insurers are slow to adopt IoT,” John Beal, Senior Vice President, Analytics, Insurance, LexisNexis Risk Solutions told Connected Real Estate Magazine. “The first is that most insurers think of IoT at a tactical rather than a strategic level. We found that while most respondents saw IoT as a network of connected devices, few discussed its strategic uses for underwriting, claims and other analytics.
“The second cause of slow adoption is that many insurers are hesitant to be the first, so instead are taking a ‘wait and see’ approach and using in-house systems until the ROI has been proven by competitors so that they can learn from their successes and shortcomings before implementing it themselves.”
According to Paul, it’s not just insurance companies failing to embrace IoT data; the lack of enthusiasm is widespread among numerous industries. While many are “interested” in the data, few don’t know when or how they could put it to use or reap the benefits from doing so. Rather than judging IoT on the interest in sparks, it would be better to focus on how enterprises and individuals are actually using IoT and how they’re benefiting from it.