The Internet of Things -- that is, the collection of sensorized and networked devices of all kinds collecting and transmitting data -- is largely a curiosity in the insurance industry. But that shouldn't necessarily be the case -- after all, mobile phones are part of it, as are telematics devices in cars, and insurers aren't shying away from those kinds of initiatives.
For IT organizations, the emergence of these devices offers an opportunity to innovate and add real value to the business -- something that other industries are doing, says Partha Srinivasa, CIO of Houston Casualty Company, a specialty insurer.
"I've been closely watching the space for the last year or two, and while there have been very few use cases on this in insurance, there's a lot of happening in the retail space, and the automotive and healthcare companies especially are getting involved," Srinivasa says. "IT staff at insurance companies think it could be a competitive advantage for us as well."
[Here's an Internet of Things use case in insurance: Farm insurer taps into machine data]
Considering insurance's history looking for new data sources and finding how to leverage them, it's a natural fit for the industry, adds Piyush Singh, Great American Insurance Company CIO.
"It's high time we catch up with the retail industry and the computer industry that has led the charge on this side of big data," he says. "Today we might be writing policies over a year time period, but if we identify that the profile of the risk of changing constantly, risk being priced on a volatility basis might be a better solution."
But both CIOs acknowledge there are barriers that have to be broken at insurance companies to make that a reality. As business value is demonstrated, however, there will be fewer skeptics.
[Join Srinivasa and Singh in a panel discussion on how insurers can fold the Internet of Things into their wider analytics strategy, moderated by I&T's Nathan Golia, at the Insurance Analytics USA Conference, March 19-20 in Chicago. Click here for more information or to register.]
"Change is a hard thing when people are comfortable," Singh says. "From a CIO standpoint, we need focus on user experience design. We need to have that broader design on how to capture data and what it means. It's not data capture, our whole mindset needs to shift."
That might require tapping into new kinds of talent when recruiting new entrants to the insurance tech enterprise, Srinivasa says. It's not going to be about just getting insurance, but also understanding the Internet of Things landscape.
"We have been focused on insurance knowledge specific to the vertical as opposed to something more horizontal," he explains. "How do we tap into the talent and grow internally and externally? That's the question."
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Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio