4b. P&C Insurance and The IOT - Z. Schmiesing

Verisk Insurance Solutions | ISO AIR Worldwide Xactware© Verisk Analytics, Inc. All rights reserved.

Insurance andthe Connected World

Zack SchmiesingMay 17, 2016

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Demystifying the Internet of Things

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Demystifying IoT: Making sense of the data

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Technology is changing the way welive our lives. Analysts estimate

Understanding data from multiple sensorsand how it correlates to future loss is

will be connected to the Internet by 2020.

a moving target that requiresexpertise.

Source: Cisco

Identifying sources of data can be difficult when

multiple players are involved, such as hardwaremanufacturers, platform owners, etc.

50 billion devices

Variety of devices

Unwieldy andunstructured

Big data

A complex connectedhome ecosystem

insurers could expect over 10MBof data per household per day.

Depending on the volume,variety, and velocity of data,

?

Venture capital is available for this market, and

startups pop up daily.

Predicting market leaders


Why IoT?

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Product,pricing, andunderwriting

• Segmentation of risk

• Usage-based insurance and telematics

• New products

Claims• Loss mitigation

• Data-powered claims handling

Distributionand

marketing

• Value-added services

• Customer interaction/intimacy

• New business development models

• Finding solutions to common Insurance problems


Why IoT?• Finding Solutions to common insurance problems

• Underwriting– Proper Classification– Strategic Segmentation– Plug the Premium Leakage Hole– Improve the customer experience: Retention

• Claims impacts– Data at the point of failure/incident

• FNOL, eCall, quicker response, quicker to close

– Better Claims forensics– Loss Control opportunities– Improve the customer experience: Retention

• First true opportunity to redefinethe insurance timeline

– Verify conditions/operations in real time– Price risk on what’s happened to them, not what’s happened to their peers– Clearer picture at the point of sale

Better Customer Experience5


Connected-building/vehicle/cargo/equipmentdata usage road map

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Insurers can work with owners/operators in a phased approach to collectdata at various levels of detail to generate actionable insights.

VerifyUse basic data elements from connected devices to systematically verifyexistence of protective devices at point of sale and renewal

ExpandCollect a greater variety of connected data across a variety of providers toincrease segmentation and expand discounts

PredictUse real-time connected-home data to develop predictive usage-basedinsurance models to offer the best price to the best risks


Data possibilities for insurers

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Usage• Patterns of energy and water consumption• Water running when no occupants are home• Which spaces are used, when, and for how long?

Occupants• Number of occupants; frequency of access• Access points and security measures• Number of connected devices

Contents• Movement of contents in and out of the house• Major appliance/machinery location• Fire/Life safety system detection/status

Structure• Roof age and condition, material, and weight load• Wind speed, pressure, weather conditions• Gas , water leak,, hazardous materials

IoT hardware, platform, service providers are in possession of data thatcould be extremely valuable to the insurance industry.


IoT Sub-segments

Connected Vehicles

• Better segmentation;Pay-how-you-drive (PHYD)

• UBI programs attract better drivers(or more importantly clearly identify them)

• On-board technology for quicker claimsresponse; FNOL, eCall,

• Dynamic driving data limits fraud potential

• Big brother, or lower TCO?

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IoT Sub-segments

Connected Buildings/Properties

• Security, Fire, Life Safety

• Property population, access, peaks andvalleys

• Utilities -> operational fingerprint

• Natural hazards, conditions, hazardoussubstances,

• Loss Control practices

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IoT Sub-segments

Connected Industry

• Utilities -> operational fingerprint

• Machinery, tools, utilization

• Supply Chain: input/output

• Material storage

• Loss Control

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IoT Sub-segments

Connected People

• Health/Lifestyle monitoring

• Field staff logistics/safety

• Movement/motion

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IoT Sub-segments

Inland Marine Implications

• Vehicle/cargo/logistics

• Machinery

• Valuables/Equipment

• Technology especially suitedfor Inland Marine Insurance

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© Verisk Analytics, Inc. All rights reserved.

Obstacles for Carriers and OEM/TSPs



1) Lack of insight into others’ business model

OEMs make widgets (not insurance products)

– Data requirements

– Underwriting workflow

– Claims workflow

– Regulation and compliance

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Obstacles for Carriers and OEMs/TSPs

2) Scalability

Direct partnershipsare not scalable

– Contract negotiation

– Data specs

– IT Infrastructure

– Data integration

– Project management

– Relationship management

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Carriers

OEM/Datasource



3) What Data and How Much?

Example: Connected vehicles generate vast amounts of data

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4) Security and Privacy Concerns

What types of data transferred

– Highly dependent on industry

– Ideally the OEM/TSP steps up

– The most hazardous risks won’tlikely be of a transactional nature

– Regulation and compliance

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The Many-to-Many Problem

• The influx of connected structures and devices willlead to the many-to-many problem for all of us

• Both OEM and insurance industries need to solve forthis to ensure innovation can occur, and occurquickly

• The solution must be:

– Multi-channel: Gives consumers connected device dataanytime, anywhere

– Multi-use Case: Extends beyond new customer acquisition

– Quick & Scalable: Involves partner with established credibilitywith carriers and regulators

– Built in Security/Privacy: Consumer protection


Many-to-many problem

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OEM/TSP• Unproven value of insurance industry vertical• Limited bandwidth to span relationships with

multiple insurers• Engaged only with a fraction of insurance

industry, leaving much of the market “untapped”• Cost-prohibitive to create integration with

numerous individual insurers

Insurers:• Fragmented market — technology winners are TBD• Data is unfamiliar, unstructured, and inconsistent,

making insight creation difficult, lengthy, and costly• Inability to systematically validate existence of

technology and audit discount eligibility


Verisk Telematics Data Exchange™

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OEM/TSP• Provides forum for mass adoption and

monetization of data across entire insuranceindustry

• Provides insurance industry with opportunity forcost-effective integration

• Increases ease of insurance-discount application,resulting in increased consumer adoption of tech

Verisk Analytics:• Brand is an established and well-known insurance

industry leader• Pioneer and market leader of similar data exchanges

for other products and markets (auto telematics,public record data, etc.)

• Independent party facilitating data use

Insurers:• Access to more data from more companies• Data is provided in normalized, consumable format

for accelerated analysis• Minimizes the IT costs associated with building several

independent integrations with data partners• Focus more time on generating insights and less time

on brokering new relationships


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What’s Next?

Seek broad application of IoT data acrossthe insurance value chain.

Early adopters will gain competitive advantageswhile those “late to the game” will havedifficulty catching up.

Look for opportunities to share dataat scale to take advantage of fullopportunity.

Start with simpler use cases of appliedIoT data and expand business modelsover time.

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5 Partner with a “big data” specialistwho is familiar with both industries .


© Verisk Analytics, Inc. All rights reserved.

Thank You IMUA

Zack [email protected]

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4b. P&C Insurance and The IOT - Z. Schmiesing

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