Insurer partners with IoT to avoid millions in specie

An average return on investment (ROI) of 506% is what Hartford Steam Boiler (HSB), part of Munich Re, an insurer specializing in inspection services, risk management, and IoT technology, was able to report in 2021. The company was able to avoid millions of dollars in property and equipment losses using its Sensor Solutions by HSB™ solution, which applies IoT sensors, data dashboards, and proprietary algorithms to monitor asset conditions on a 24×7 basis.

“At HSB, we aim to create real business impact, not just provide sensors. We are continuously enhancing our IoT program through new technologies, operational improvements, and business model innovations. An average ROI of 506% by 2021 is positive evidence that our customers are truly using the potential of IoT,” says John B. Riggs, senior vice president, HSB Applied Technology Solutions.

Insurers and owners of various types of businesses – offices, hospitals, retailers and schools, among others – are among the top 10 customers who have contributed to this milestone. “We achieved exceptional ROI in 2021 on our HSB IoT programme. The unique combination of IoT technology and HSB insurance expertise has enhanced our members’ risk management and operational effectiveness and highlights our commitment to innovative solutions,” says Brett Carruthers, director of risk management at New York School Insurance Reciprocal (NYSIR), a New York (US) public school insurance program organization.

The Sensor Solutions by HSB™ suite combines smart sensors and other data and analytics technologies to identify and prevent potential losses that could affect property and equipment. The solution uses AWS IoT services, such as the AWS IoT Core platform, to provide secure connectivity to devices and systems to ingest, store, and analyze IoT data. The solution works with real-time data, which results in fewer claims and better customer experience, and enables the development of innovative insurance products. “HSB can quickly and securely connect and extend new insurance solutions to help customers get the information they need to assess risk and reduce property losses,” says Mark Relph, AWS Global Lead for IoT.

Over the past five years, HSB has collected and analyzed nearly 30 billion sensor readings and issued more than 270,000 alerts for over 20 classes of business.

Rising market

The global IoT insurance market was estimated to be worth $13.3 billion in 2021 and is expected to reach $150.7 billion by 2026, growing at a compound annual rate of 62.5%, according to ResearchAndMarkets.com. The adoption of these types of insurance products that use data from internet-connected devices and telematics systems to improve risk understanding.

It is a new approach based on sensors and digital technologies to monitor the status of insured assets, transforming raw data into relevant information. These IoT advances for insurance can increase productivity and overall business profitability, and improve the risk profile of policyholders. In addition, automation can help reduce the cost of claims processes by up to 30%, and IoT-connected devices can help life and health insurance companies reduce premiums by up to 25%.

To better understand the potential applications of IoT in the insurance industry, the Deloitte Center for Financial Services (DCFS), together with Wikistrat, polled researchers, technology and finance experts, and entrepreneurs from 20 countries and asked them to imagine how the Internet of Things could be applied in the context of insurers. The images below illustrate how IoT could reshape this industry in the view of these audiences.

As all is not flowers, the insurance industry may face some challenges in scaling up IoT adoption:

1. Promote changes to existing, often conservative, insurance business models;

2. Develop more skills to handle larger volumes of data and in real-time;

3. Maintain compliance with data privacy regulations and other standards;

4. Ensure data security and combat fraud originating from the Internet of Things.