The world is more connected than ever before. From our phones and watches to our cars and homes are communicating via the Internet of Things (IoT).
And the sheer size of the IoT is mind boggling. Some 127 devices are connected to the internet every second, writes Kaylie Gyarmathy, marketing manager at data center provider vXchnge. And by 2020, there will be a total of 20.4 million connected devices.
With high-speed wireless technology becoming more prevalent, IoT is growing exponentially, adds Melissa Liton, director of global communications at cloud analytics provider, Sumo Logic. This trend is across industries, and insurance is no exception.
In this post, we’ll examine some specific forms of technology impacting the insurance industry and how independent agents can ensure a positive customer experience.
Three Types of Tech
But there are three particular types of technology independent agents need to take note of: smart home devices, connected auto and wearables. These are what your customers are using in their everyday lives and heavily impact the way you approach insurance coverage.
Here’s a brief explanation of each of these technologies if you’re unfamiliar.
“Smart home is a term that refers to modern homes that have appliances, lighting and/or electronic devices that can be controlled remotely by the owner, often via a mobile app,” says technical writer, Forrest Stroud. “Smart home-enabled devices can also operate in conjunction with other devices in the home and communicate information to other smart devices.”
Some examples include home security systems, HVAC systems, lighting devices and appliances. Connected auto refers to vehicles that are equipped with internet access where data can be shared with devices inside and outside the vehicle. Chad Morley, VP of the automotive and transportation sector at manufacturing solutions provider Jabil, says this can include AI-driven navigation systems, telematics to monitor vehicle diagnostics and sensor applications such as radars and cameras.
This is a trend that’s growing quickly, and the team at telecommunications company Frontier Communications predicts a full three-quarters of all vehicles will have built-in IoT connectivity by 2020.
You may have a piece of wearable technology on right now. IT company Happiest Minds defines wearables as devices worn on the body and used for tracking information in real-time. Smart watches, fitness trackers, smart jewelry, clothing and even implantables (devices embedded under the skin) are all examples.
The Advantages of IoT
There are a wide array of benefits to these cutting-edge technologies. Cloud solutions and mobile app development company NewGenApps says smart home technology can make homes safer, more efficient and reduce energy consumption.
The team at developer platform High Mobility points out that connected cars can improve safety through sensory equipment, alleviate traffic by accessing real-time data on congested areas and even give disabled individuals autonomy with driverless cars.
And when it comes to wearables, health and fitness tracker Biostrap writes that these devices can help people get in better shape, take personal responsibility for their health and become more aware of how their daily activities are affecting their bodies.
On the other hand, these technologies can create some considerable concerns, with perhaps the biggest being security. Cybercriminals have shown a growing interest in connected devices, according to malware analyst Mikhail Kuzin and colleagues at cybersecurity solutions provider Kaspersky Lab. In the first half of 2018, there were three times as many malware samples attacking smart devices as there were in all of 2017. And in 2017, there were ten times more than in 2016.
These relatively inexpensive interconnected devices combined with a growing number of sensors and remote monitors have created a whole new set of security issues, agrees Professor Charles T. Harry, director of operations at the Maryland Global Initiative in Cybersecurity. We’re basically moving too quickly to keep up with increasing threats.
Many users don’t know to configure these devices correctly and simply aren’t aware of risks they face by using them. “Even if you’re savvy enough to configure the connected device the right way, other gaps exist,” according to web design and software development firm Atlantic BT. “Connected device manufacturers are often slow to update firmware or release patches.”
Privacy is another huge issue. Once a server is compromised, hackers can use non-intrusive methods to gain sensitive information and can monitor activity within a home via sensors, cameras and other devices, explains enterprise cybersecurity provider, Trend Micro.
There’s also the matter of complexity. For instance, having more than 10 connected devices in a home can lead to a level of complexity that’s more of a burden than an asset, explains IoT analyst Stacey Higginbotham. Just trying to keep everything maintained and functional can be a major source of headaches.
These are all factors potential users should take into consideration.
Tech in the Insurance Industry
Due to the ubiquity and affordability of connected devices, they’ve become heavily intertwined with the insurance industry. Indeed, many companies are now offering incentives to homeowners who adopt smart home technology.
Mitchell Klein, CEO of technology alliance Z-Wave gives specific examples of the practice, one being State Farm giving discounts to customers who installed Canary connected devices — a popular home security system. Another example is American Family Insurance who partnered with smart home product manufacturer Nest, providing smart smoke and carbon monoxide detectors to homeowners in Minnesota at no extra cost.
Senior principal analyst at IHS Markit, Blake Kozak also explains that water damage is a common and costly insurance liability, which is why many insurance companies are interested in water-leak sensors connected to water shut-off valves. This could be a highly effective way to minimize major water damage and prevent claims from ever happening.
And experts have found this technology is something many insurance customers are receptive to. “They certainly would not go out and buy it for the technology’s sake,” writes business development professional Antti Vihavainen. “But, when it is presented as a value add insurance product that is easy to install, easy to use, then this barrier is removed.”
Helping Customers Navigate Challenges
While connected devices certainly hold benefits for both independent agents and their customers, it’s crucial that you address the challenges as well.
Security and privacy concerns are very real and something many customers are unaware of or ill-equipped to deal with, says Nat Wienecke, senior vice president for federal government relations at the American Property Casualty Insurance Association. Your duty as an agent — especially when you’re the one recommending connected devices — is to educate your customers on information and security risks and how to properly manage them.
This begins with keeping their home Wi-Fi network secure, says Peter Lanza, vice president of personal lines at BNC Insurance. Smart home users should set up a firewall, activate encryption and use different usernames and passwords than those provided by the manufacturer. He also suggests routinely updating devices with security patches. With new vulnerabilities continually detected, developers issue patches to combat evolving threats and keep devices safe.
For connected auto safety, Clayton Weeks at cybersecurity products provider AVG Technologies recommends that drivers regularly update their car’s software, disable Bluetooth and Wi-Fi when not in use and scan USB drives before plugging them into their vehicle to determine whether or not they’re safe. He also encourages storing keyless remotes in a faraday (radio frequency shielding) bag or cage (like a fridge or microwave) to block wireless signals, as this prevents criminals from hacking the vehicle to gain entry.
As for wearables, users should check the default settings when setting up the device. It’s important to always assume that the default settings are not there to protect their privacy and security. Instead, they’re there to maximize the amount of data the manufacturer has access to, says data privacy attorney Joe Jerome.
Turning off geolocation tracking on a phone is another good idea, he adds. The majority of wearables are synced up to an app on their smartphone, which can give hackers information on their whereabouts. For example, hackers could follow a user’s running path if they were wearing a Fitbit. An easy way to stay protected and minimize private data being exposed is to simply turn off location tracking.
Beyond that, people should only use wearables with the latest encryption technology. The product’s security information should provide details on this and ensure users aren’t putting themselves at unnecessary risk.
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