Access to cheap, connected sensors and smart devices means companies can leverage data in innovative and meaningful ways. This new use of the Internet of Things will lead to changes in how and what insurance products are sold. In the automotive industry, services analyzing telematics data to recommend safer driving routes and encourage better driving behavior will become the norm. Liberty Mutual recently debuted RightTrack, an in-vehicle mobile application developed in collaboration with Subaru. The application provides real-time feedback on driver performance in order to educate and correct, and as a result make insureds safer.
In the future, consumers will buy insurance from insurers not just for the indemnification or risk but for additional risk mitigation services. Risk is never going completely away, but in different areas it will be greatly reduced (with automotive being the most obvious example). Claims and corresponding losses will go down, and rates will need to follow. This shift from indemnification to mitigation is a move away from how insurers have done business for hundreds of years, but it’s also in the best interest of the insured and a great opportunity to provide more and better service.
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