Channels

11:00 AM
Kelly Sheridan
Kelly Sheridan
Commentary
Connect Directly
Twitter
LinkedIn
Google+
RSS
E-Mail
50%
50%

UBI: Pioneer of Advanced Digitization

How automobile telematics serves as a gateway to the Internet of Things and more on the future of digital strategy.

Insurers currently occupy a wide range on the digital spectrum, explained Donald Light, director of Celent’s Americas P&C Insurance Practice, at the L&T Infotech Insurance Leadership Forum held this Wednesday at New York’s Waldorf Astoria hotel. While some experiment with paperless initiatives, others are venturing into mobile apps and core system replacements.

Many insurers are still in the early stages of digital, Light explained, but the future is promising. Technological advances in mobile, big data and analytics, and the Internet of Things will enable businesses to expand their offerings and enhance customer service capabilities.

[ Insurers Focus on ‘3CM’ for Customer Experience: SMA. ]

“An advanced digital insurer exploits the inherent ability of digital data and information to transform products, processes and results,” said Light. “[Digital] does change processes – it can make them faster, it can make them more satisfying.”

The Internet of Things, in particular, is a key enabler of digital strategy. Light describes how objects with networked sensors will provide a vast amount of data that insurers will be able to access for the first time. This offers an invaluable opportunity to apply analytics and make better-informed business decisions.

Usage-based insurance (UBI) is the first example of how insurers can leverage the Internet of Things. In its first stages, UBI provides simple measurements, such as distance traveled and vehicle positioning, which insurers can use to evaluate ownership risks and incentivize policyholders to drive safely.

“The Internet of Things is really opening up broader horizons and more things [insurers] can do, but telematics for vehicles is kind of the pioneer here,” Light explained. “I think there’s going to be very strong economic incentives for companies to expand the pool.”

There are three constantly interacting components within the Internet of Things, said Light. These are objects with networked sensors, data stores, and analytic engines. The objects gather information, such as vehicle speed or home temperature, to data stores. The analytic engines, both human and machine, analyze this data then provide feedback and control to the objects with sensors.

“This data has not been available to insurance companies, but the Internet of Things throws data to insurance companies,” said Light. He predicts that it will impact every part of the insurance life cycle.

Kelly Sheridan is an associate editor for Insurance & Technology. Prior to joining InformationWeek Financial Services, she was a staff writer for InformationWeek and InformationWeek Education. Kelly has also written for trade publication Promo Marketing and a number of ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Kelly22
50%
50%
Kelly22,
User Rank: Author
6/13/2014 | 8:30:41 PM
re: UBI: Pioneer of Advanced Digitization
Hopefully, yes. While it'll take some time for all insurers to reach the 'extreme' end of Donald's continuum, it's good to see some progress being made in that direction.
amitunde
50%
50%
amitunde,
User Rank: Apprentice
6/11/2014 | 9:16:10 PM
re: UBI: Pioneer of Advanced Digitization
At L&T InfotechG«÷s Insurance Leadership Forum, Donald
defined a continuum from 'Basic digital' to 'Advanced' and 'Extreme' digital
and cited examples on how insurers have started to shift right on the continuum,
mostly by taking advantage of G«£Internet of ThingsG«•. While I understand Kathy's
pessimism about industry's appetite for transformational initiatives, it may
turn out to be different this time due to nature and pace of technology advances. A few catalysts may
compel everybody to move forward at faster pace.
KBurger
50%
50%
KBurger,
User Rank: Author
6/9/2014 | 4:57:47 PM
re: UBI: Pioneer of Advanced Digitization
If you think about it, insurance companies saw the benefit of digital going back to the 90s when many companies adopted imaging, especially in claims, as a way of reducing paper. Back then there were many warnings and admonitions about not "paving the cowpath" and using imaging as a means of improving processes, not just reducing paper in the same processes. So Donald's comment about how digital changes processes, while true and important, is not a new observation. Back then insurers saw the operational/efficiency benefits of digital technology (imaging) but did not exploit the transformational benefits. Will it be different today?
Register for Insurance & Technology Newsletters
White Papers
Current Issue
Insurance & Technology Digital Issue Oct. 27, 2014
Innovation? Check. Core modernization? Check. Security? Check. Today's insurance IT challenges don't stump this year's Elite 8.
Slideshows
Video