Hard to believe we’re almost three quarters through 2021. Now seems as good a time as any to draw your attention to one of last year’s predictions on insurance. I really like our prediction that connected devices will drive a 50% increase in the usage-based insurance market. Why? Not because the odds of it happening are high. Rather, I like it because we see significance in this small corner of the market.
Connected devices have been a part of our life for a while now. Whether you realize it or not, devices that monitor other devices have been in use for decades, sometimes in harsh environments. Subsea oil fields rely on remote, continuous monitoring to maintain production in 4,000 m to 5,000 m depths. If those instruments can detect systems’ faults under that much water, detecting a leak in your house shouldn’t be all that difficult.
Indeed, insurers have taken note of the value of connected devices. Chubb announced the acquisition of StreamLabs, which makes internet-of-things-enabled water monitoring and leak detection products. State Farm recently patented a similar technology. The focus? Avoiding loss rather than paying for it after the fact.
We’ve addressed the merits of loss avoidance in past research, such as The Future Of Insurance. We see nascent offerings in home (connected) and life (wearables) and a more developed market in commercial and personal auto (telematics). Not only do these technologies have the potential to elevate the customer experience and simplify workflows, they also promise to reduce environmental impacts of costly property claims. If a device prevents a fire, the building doesn’t need to be replaced.
The market may yet grow by leaps and bounds this year. Whether it does or not, the allure of connected devices will remain an important piece of the insurance landscape for decades.
Have a look at Jeffery Williams’ latest piece, Connected Insurance: Reality Or Hype?, for more details.