Insurance being Redefined with IoT
Technological development in the areas of data analytics offering ‘micro-insurance’ services, smart burglar alarms, and connectivity between devices is reshaping the insurance sector. Insurance companies are utilizing the consumer related lifestyle data derived from the connected devices that form the Internet of Things (IoT). This technology finds use in numerous areas of insurance such as personal health and assessment of farm animals.
According to Micro Finance, wearable devices like FitBit are deployed by insurance companies to gather data from the clients wearing them. Such clients are charged a lower insurance premium.
Consumers integrating vehicle telematics devices, enhancing vehicular navigation, safety, and communication features, with their vehicles are charged lower car insurance. Startup company Lumkani has designed, "the world's first networked heat-detector designed specifically for a slum environment". Lumkani designed the networked smoke detectors for informal settlements such as the townships in South Africa. Lumkani devices are connected to each other using radio frequency. Upon fire being detected, all homes within a 40 meter radius are warned with alarms. For a fire is in a separate dwelling, a different alarm sound is employed to signal users.
Smallholder farmers are leveraging weather stations to facilitate crop insurance. The IFFCO-Tokio system is making use of radio-frequency identification (RFID) chips to pilot a cattle insurance project for poor farmers (more than 25,000) in the Indian states of Gujarat, Punjab, Maharashtra, Rajasthan, and Orissa. The ACRE shared technology is helping farmers enroll into insurance programs as groups. These insurtech practices enable insurance companies to promote and augment their own services and secure customer loyalty by processing the data collected to reduce risk, alter insurance packages, and improve communication with customers, ensuring enhanced customer experience.