1. Internet Of things
And the Insurance industry
Suman Chatterjee,
PGPM1114, Roll: 127

2. WHAT IS INSURANCE ?
Risk
Avoid
Transfer
Mitigate
Accept Coverage
Premium

3. HISTORY OF INSURANCE:
CHINA, 3rd millennia BC:
• Chinese merchants travelling treacherous river rapids
would redistribute their wares across many vessels to
limit the loss due to any single vessel's capsizing.
BABYLONIA, 2nd millennia BC:
• If a merchant received a loan to fund his shipment,
he would pay the lender an additional sum in
exchange for the lender's guarantee to cancel the
loan should the shipment be stolen or lost at sea.
GREECE & ROME, 600 BC:
• “Benevolent Societies“ cared for
the families of deceased members and
paid funeral expenses of members.
• Birth of Health and Life Insurance.

4. INSURANCE: THE CURRENT SCENARIO
0
5
10
15
20
25
0
50
100
150
200
250
300
350
Revenues
Market Cap
Profit
Source: www.mbaskool.com
67.3
53.4
29.6
6.8
4.9
72.4
55.6
33.4
9.6
5.8
0
10
20
30
40
50
60
70
80
North
America
Europe Asia Pacific LATAM Others
Year 2014
Year 2016
Source: http://www.celent.com/node/32286
Top 10 Global Insurance Cos by Market Cap IT Spending in Insurance: A Global Perspective

5. IOT : SOME FACTS

6. WHAT DOES IOT MEANS FOR INSURERS ?
Lower claim
severity and
frequency.
More accurate risk
assessment.
Improved claim
servicing.
Higher customer
satisfaction.
Insurer

7. Continuous monitoring of Risk. Change in any
lifestyle event like marital status or occupation will
be reflected in policy premium.
IoT wearable devices capture significant
measures, like heartbeat, temperature, blood
sugar, exercise duration and report them to
insurers.
LIFE AND HEALTH INSURANCE

8. AUTO INSURANCE
Vehicles are fitted with sensors
that monitor driver behavior, to
keep track of when, where and
how the vehicle is in motion.
The insurance premium is
primarily determined on the
basis of driving behavior, rather
than proxy variables like vehicle
make, model, and year.
Adoption of usage-based
insurance (UBI) over traditional
pricing for e.g. in countries like
the US, Canada, UK, Italy, and
Germany.

9. PROPERTY/CASUALTY INSURANCE
Insurers can create feedback
and control processes to
command or request things to
change their loss-related
behavior and performance.
IOT provides a much more
accurate picture of the
exposures, hazards, and risks of
what is being insured.

10. CONCLUSION
Opportunities
The IoT will change every part of
the insurance value chain,
including product design,
pricing, underwriting, service
and claims.
IoT will give insurers first order
data on a great many hazards
and risks, and the ability to
create feedback control
processes to substantially
reduce losses.
Challenges
Will the massive amount of
connectivity lead to a potential
intrusion and unwelcome
constraints on individuals’
actions and speech.
If losses are reduced, won’t
the overall value of Insurance
industry also reduce ?