How the Internet of Things will change insurance

In PwC’s latest publication, Financial Services Technology 2020 and Beyond: Embracing disruption, we explore the real world implications of technological advances on the financial services industry and those who must supervise and use it. We invite you to explore the full report but wanted to focus in on an important topic for the insurance industry, the ‘Internet of Things’ (IoT).

The IoT is a network of devices that will record and communicate data; everything from computers to cars to coffee machines. Customers, more than ever, are learning about the value of their personal data. But what does this mean for insurance?

For life and health insurers, wearable computing (building on the technology already widely used in fitness sensors), could make the underwriting process more collaborative. For example, insurers may use real-time insights into policyholder health and behaviour to offer discounts, eliminate the need for lengthy medical checks and simplify the contract process.

Big data analytics, sensor technology and the communicating networks that make up the IoT will allow insurers to anticipate risks and customer demands with far greater precision than ever before. The benefits would include not only keener pricing and sharper customer targeting, but a decisive shift in insurers’ value model from reactive claims payer to preventative risk advisor. Companies who use data to their advantage will be able to price products based on a deeper understanding of risk; those who don’t will merely compete on price, compressing their margins with lower revenues and proportionately higher payouts.

To benefit from IoT and other technology developments discussed in the report, we’ve identified six key priorities to focus on:

  1. Update your IT operating model to get ready for the ‘new normal’
  2. Slash costs by simplifying legacy systems, taking SaaS beyond the cloud and adopting robotics/AI
  3. Build the technology capabilities to get more intelligent about your customers’ needs
  4. Prepare your architecture to connect to anything, anywhere
  5. Pay more attention to cyber-security before it becomes urgent
  6. Make sure you have access to the talent and skills necessary to execute and win

We encourage institutions to take a realistic view of their situation – holistically, across the entire IT organization – to understand the current state, the desired state, and how to get from here to there.

Allan Buitendag
National Insurance Leader

Contact us

Allan Buitendag

Partner, Financial Services Consulting Leader & National Insurance Leader, PwC Canada

Tel: +1 416 815 5239