Many predictions about how the so-called "Internet of Things" -- the infrastructure of sensorized, connected devices of all kinds -- will change insurance have revolved around the potential in the personal lines business. But while things like home-monitoring technologies are creeping into that business, in commercial lines insurance, the ability to sensorize and glean insurance-relevant data from critical equipment is fast becoming the norm.
Rural Community Insurance Services, an agriculture insurance carrier and division of Wells Fargo, recently announced that its policyholders who use precision farming equipment from Ag Leader and Trimble can submit that GPS-derived data directly to the insurer to meet compliance and reporting requirements. CIO Rick Greenwood and his team built a tool into the company's administration system, CIMax, that can accept uploaded data on what crops were planted and where. The information is critical for RCIS to provide insurance products that meet standards set by the Department of Agriculture's Risk Management Agency.
"Every year, farmers need to report acres that they've planted so we can make sure we're being compliant based on the policy rules for the premium," Greenwood says. "It has to be submitted by certain a certain date, and until we have that info, the feds aren't going to back it."
Traditionally, this data was self-reported and verified by RCIS agents -- a costly and time-consuming process. But since farmers were already using the precision equipment for their own planning purposes, Greenwood says, it was a natural fit to integrate it into the insurance operations.
"At first what farmers used this equipment for was helping navigation for drivers in the field, to monitor fuel consumption, seed overplant, and provide other driver guidance," he explains. "So we thought, 'Is there an automated way that we can create some efficiency with all this information you're collecting that we can pass on for insurance purposes?'"
In order to ensure the accuracy of the data collected so that regulators will accept its veracity, farmers keep comprehensive calibration logs that prove their equipment is up-to-date and functioning correctly.
"When we submit the data to RMA, we have to have the calibration records to validate it," Greenwood says. "But the regulators know precision farming equipment is becoming more dominant in that field. They know the purpose of calibration and what that process is in making sure we're getting correct production yields. That's why they're putting in these calibration records in place -- otherwise we have to go out there."
Ag Leader and Trimble equipment was selected because of their large install bases, Greenwood adds. Farmers use the technologies for more than just mapping purposes, too. In the future, there is potential for RCIS to help interpret and develop farming strategy using weather, soil moisture, and harvest information that the technologies also collect to aid their policyholders.
"Our next rollout would be around production harvest information -- a lot of them have yield monitors," Greenwood says. "But there are more and more things that can be exchanged between an insurance company and a farmer. Trimble has a technology underneath them called RainWave, that measures moisture content. That's data we'll probably use further down the line."
And while currently data is transmitted via a dongle that connects to the precision equipment, then a PC, Greenwood expects that wireless transmission is the next frontier for these technologies.
"You look at the farmer and all the people they're associated with, and the proliferating of 4G networks, you're not far from getting info off the machine straight in," he says.
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