A new research from Lloyd’s has found that the advent of Internet of Things (IOT) has a potential to enable more innovation across the entire insurance value chain, including the way claims are settled in future.
Image: Lloyd's of London publishes report on IOT and insurance. Photo: Courtesy of Dlanor S/Unsplash.
The research from Lloyd’s, ‘Networked World: Risks and Opportunities in the Internet of Things’ was published in collaboration with University College London’s (UCL) Department of Science, Technology, Engineering and Public Policy (STEaPP) and the PETRAS Internet of Things Research Hub.
Lloyd’s stated that IOT could lead to data capture and management at an unprecedented scale, resulting in better risk assessment, flexible, and real-time insurance products. It could also increase policyholders’ concerns about the use of accuracy of their data.
STEaPP’s digital policy lab director Madeline Carr said: “Any large-scale technological shift raises challenges to the status quo and creates opportunities for those who see them early on in periods of transformations. Early adopters, especially in markets, are afforded additional benefits, as they can shape expectations, terms of engagement, and best practices in ways that address their interest.”
At the same time, such interconnectivity could create new business models, where more is known about insureds, bespoke policies can be generated in real-time and fraudulent claims can also be recognized quickly. The ability to create personalized policies can enable insurers to more accurately predict and mitigate risks.
Additionally, the range and quality of security standards that currently exist for the IoT could make it difficult for insurers to make accurate risk assessments.
Several critical blind spots in the regulation and legislation of IoT devices and their impacts are also present, stated Lloyd’s. These include uncertainties surrounding attribution and liability should anything go wrong.
Lloyd’s of London innovation head Trevor Maynard said: “Insurers should play a role in shaping the IoT landscape and Lloyd’s has proposed several options from leading on data standardisation to working with governments and tech companies.
“Insurers should proactively talk with clients to review and assess all risks associated with IoT to provide them with advice on best practice and appropriate risk solutions, thereby shaping the development of the IoT ecosystem in which they operate.”