When I reached out to analysts to ask what they thought the biggest insurance technology story of the year would be in 2014, the potential of the "Internet of Things" -- that is, the proliferation of sensors and networked technology on an array of devices -- was a clear leader. The new world of connected devices includes telematics devices in cars, Google Glass, FitBit, blood pressure monitors and myriad other items.
Many of these items are being released as we speak at the latest Consumer Electronics Show in Las Vegas. Just check out this list of items from our sister site, InformationWeek, including a GPS wristband and a brooch that measures sun exposure.
Though The Nolan Company's Steve Callahan sees lots of potential in these developments to change the insurance industry for the better, he says that the industry must tread carefully in developing and releasing these capabilities. Insurers are increasingly becoming stewards of an ever-increasing trove of personal data that goes beyond name, address, and credit card information, he notes.
"As companies continue to harvest and leverage data, with increasingly advanced tools from an ever-expanding ocean of discrete data points, there must be some formal acknowledgment of the role of privacy, the responsibility to aggressively protect the integrity and accessibility of consumer data, and the rapidly increasing regulatory guidance on exactly what can be collected and used in what manner," Callahan says.
Last year, I wrote that data security would be the insurance technology story of the year in 2013. My thesis: Even the most conscientious stewards of personal data in insurance IT organizations can't prevent increasingly savvy actors from gaining access to personal data. And, while insurance lacked a major high-profile breach, two stories began unraveling the public's trust in next-generation technologies: the Edward Snowden/NSA revelations, and Target's Christmas-season exposure of 40 million credit-card numbers.
"The world at large has become more acutely aware of data privacy and security issues in light of the revelations about NSA data collection activities and the massive data breaches that seem to hit us regularly," says Mark Breading of SMA. So could consumers reflexively become wary of using new technologies, since they don't trust the companies on the other end to protect it (or fear they might just be giving it away to the government or other third parties?) Celent's Mike Fitzgerald doesn't think so, at least at this time.
"Despite the publicized breaches, the prevailing consumer attitudes have not changed. People are still eager to surrender personal data for convenience or for 'free stuff,'" he notes. "Companies will continue to allocate more investment toward protecting their infrastructures and this will be a continued cost of doing business in the digital world going forward."
Novarica's Tom Benton agrees, going so far as to say that consumers are increasingly aware of their implicit loss of privacy in turning over some of their data.
"Consumers are giving up on keeping their data private and now demanding that they get something in return," he says. "They will want every company that has their data to give something back, like Amazon providing recommendations once it knows our purchasing patterns, Facebook knowing who we should be connecting with based on current friends and searches."
Whether or not that's true, however, is a matter of debate. And it will be something to watch in the coming year. Will more revelations of the permanence of cyber exposure lead to a throttling back among consumers when it comes to transmitting their personal data over the internet? Or, will the lure of personalized services help consumers rationalize the potential risk? That, after all, is the difficult part for insurers. Technological development is a given. Acceptance is another.